Amarindo, Inc. $($AMR$),$ is a newly public firm with $10\mathrm{.}0$ million shares outstanding. You are doing a valuation analysk

of AMR. You estimate its free cash flow in the coming year to be $$14\mathrm{.}62$million, and you expect the firm's free cash

flows to grow by $3\mathrm{.}6\%$ 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: $$ AMR has a much lower debt$-$equity ratio of $0\mathrm{.}42,$ which is expected

to remain stable, and its debt is risk free. AMR's corporate tax rate is $20\%,$ the risk$-$free rate is $4\mathrm{.}9\%,$ and the

expected return on the market portfolio is $10\mathrm{.}7\%$

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

b$.$ Estimate AMR's share price.

Data table

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