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Business, 30.05.2020 19:57 rleiphart1

CAPM and Valuation. You are considering acquiring a firm that you believe can generate expected cash flows of $10,000 a year forever. However, you recognize that those cash flows are uncertain. (LO12-2) a. Suppose you believe that the beta of the firm is .4. How much is the firm worth if the risk- free rate is 4% and the expected rate of return on the market portfolio is 11%

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