A. Ofori Mintah is a company with five main subsidiaries. The percentage of its business

coming from each of the subsidiaries and their respective betas, are given below:

Subsidiary	Percentage of Business	Beta
Real Estate	20%	1.15
Restaurant	10	0.85
Transport	15	1.60
Waste Management	20	1.35
Consultancy Services	35	1.05

Required:

i. Calculate the companys beta

ii. Calculate the required rate of return for the company given that the risk free rate of

return is 7% and the market return is 12%.

iii. If the market rate of return increases to 14%, what will be the companys required rate

of return?

iv. Recent increase in the demand for processed food necessitated a change in the focus

of Ofori Mintah Company. The company is considering an increase in its reliance

on the restaurant subsidiary, so that the percentage of its business from this

subsidiary will be 20 percent. The company will also decrease its reliance on the

consultancy services, so the percentage of its business from that subsidiary will

decrease to 25 percent. What will be the required rate of return if they adopt these

changes?