Cunningham Cuisine is an all-equity financed company operating in the culinary arts and family restaurant segments. Cunningham Cuisine has an equity value of $500 million. The culinary arts division is worth $80 million and has a beta of 3.0. The family restaurant division has a beta of 1.2. The risk free rate is 3% and the expected excess return on the market is 5.25%. Assume no taxes.

a.If the company has no debt, what is the beta of Cunningham cuisines equity?

b.If the company has no debt, what is the expected return on Cunningham Cuisines stock?