Amarindo, Inc. (AMR) is a newly public firm with 10 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $15 million, and you expect the firms free cash flows to grow by 4% per year in perpetuity. Because the firm has only been listed on the stock exchange for a short time, you do not have an accurate assessment of AMRs equity beta. However, you have estimated the following data for UAL, another firm in the same industry:

Equity Beta 1.75 Debt Beta 0.3 D/V Ratio 0.5

AMR has a much lower debt-value ratio of 0.2, which is expected to remain stable, and its debt is risk free. AMRs corporate tax rate is 40%, the risk-free rate is 5%, and the expected market risk premium is 6%. What is AMRs equity cost of capital? Group of answer choices

11.7% 12.7% 13.7%