Amarindo, Inc. $($AMR$),$ is a newly public firm with $8\mathrm{.}5$ million shares outstanding. You are doing a valuation analysis of AMR.

You estimate its free cash flow in the coming year to be $$15\mathrm{.}49$ million, and you expect the firm's free cash flows to grow by

$4\mathrm{.}3\%$ 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: ${?}^1.$ AMR has a much lower debt$-$equity ratio of $0\mathrm{.}36,$ which is expected to remain stable, and its debt is risk free.

AMR's corporate tax rate is $35\%,$ the risk$-$free rate is $4\mathrm{.}6\%,$ and the expected return on the market portfolio is $10\mathrm{.}8\%.$

Table $1$

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

$(5$ points $)$

The equity cost of capital is

$\%.($Round to two decimal places.$)$

b$.$ Estimate AMR's share price.

$(5$ points$)$

The share price is $

$($Round to the nearest cent.$)$