Question: Problem 12-6 CAPM and Valuation (LO3) You are considering acquiring a firm that you believe can generate expected cash flows of $12 000 a year

Problem 12-6 CAPM and Valuation (LO3) You are considering acquiring a

Problem 12-6 CAPM and Valuation (LO3) You are considering acquiring a firm that you believe can generate expected cash flows of $12 000 a year forever. However you recognize that those cash flows are uncertain 2. Suppose you believe that the beta of the firm is 07 How much is the firm worth it the risk-free rate is 3% and the expected market risk premium is 9? (Round your answer to the nearest cent.) The value of the firm b. By how much will you misvalue the firm if its beta is actually 12 (Round your answer to the nearest cent. Enter your answer as positive value.) By underestimating beta, you would overvalue the firm by si

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