Amarindo, Inc. (AMR), is a newly public firm with 8.0 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $14.97 million, and you expect the firm's free cash flows to grow by 4.5%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 1.20 0.24 0.8

AMR has a much lower debt-equity ratio of 0.24, which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 35% the risk-free rate is 5.2% and the expected return on the market portfolio is 10.7 %

a. Estimate AMR's equity cost of capital.

b. Estimate AMR's share price.