I am buying a firm with an expected perpetual cash flow of $1,450 but am unsure of its risk. If I think the beta of the firm is zero when the beta is really 1, how much more will I offer for the firm than it is truly worth? Assume the risk-free rate is 5% and the expected rate of return on the market is 20%.

Present value of the firm if beta equals 0

Present value of the firm if beta equals 1

Present value difference