I can follow how to do this one until the last step Req B. (40/100)x1+ (60/100)x1.4583... I cant get it to add up to 1.76. Please help. thanks in advance Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional $60 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return?

Selected Answer:	[None Given]
Answers:	a. 1.85
b. 1.76
c. 2.04
d. 1.94
e. 1.68

Response Feedback:

Rationale:

Old funds (millions)	$ 40.00	40.00%
New funds (millions)	$ 60.00	60.00%
Total new funds	$100.00	100.00%
Beta on existing portfolio	1.00
Risk-free rate	4.25%
Market risk premium	6.00%
Desired required return	13.00%	13% = rRF+ b(RPM); b = (13%rRF)/RPM
Required new bp	1.4583	beta = (ReturnRisk-free)/RPM
Required beta, new stocks	1.76	Req. b = (Old$/Total$)Old b +
		(New$/Total$)New b

Beta on new stocks = (Req. b(Old$/Total$)Old b)/(New$/Total$)