Question: Let the risk-free rate be 8% and expected return on the market 18%. Yiersansi is buying a firm with an expected perpetual cash flow of

Let the risk-free rate be 8% and expected return on the market 18%. Yiersansi is buying a firm with an expected perpetual cash flow of $20,000 but is not sure about its risk. Suppose Yiersansi thinks the beta is 0.80 but its actual beta is 1.00, how much more (in $1,000) is Yiersansi paying for the firm than it is truly worth

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