Problem 12-6 CAPM and Valuation (LO2) You are considering acquiring a firm that you believe can generate expected cash flows of $30,000 a year forever. However, you recognize that those cash flows are uncertain. a. Suppose you believe that the beta of the firm is 2.4 . How much is the firm worth if the risk-free rate is 5% and the expected rate of return on the market portfolio is 7% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. How much is the overvalue of the firm if its beta is actually 2.6? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Problem 12-6 CAPM and Valuation (LO2) You are considering acquiring a firm that you believe can generate expected cash flows of $30,000 a year forever. However, you recognize that those cash flows are uncertain. a. Suppose you believe that the beta of the firm is 2.4 . How much is the firm worth if the risk-free rate is 5% and the expected rate of return on the market portfolio is 7% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. How much is the overvalue of the firm if its beta is actually 2.6? (Do not round intermediate calculations. Round your answer to 2 decimal places.)