a. Estimate? AMR's equity cost of capital.

b. Estimate? AMR's share price.

Amarindo, Inc. (AMR), is a newly public firm with 9 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $15.38 million, and you expect the firm's free cash flows to grow by 3.7% per year in subsequent years. Because the firm has only been listed on the stock exchange for a short time, you do not have an accurate assessment of AMR's equity beta However, you do have beta data for UAL, another firm in the same industry: Equity Beta Debt Beta Debt-Equity Ratio UAL 1.35 0.27 0.9 AMR has a much lower debt-equity ratio of 0.27, which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 32%, the risk-free rate is 4.7%, and the expected return on the market portfolio is 11.4%