Amarindo, Inc. (AMR), is a newly public firm with 9.5 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $14.52 million, and you expect the firm's free cash flows to grow by 4.3 % 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: UAL's equity beta is 2.25, it's debt beta is 0.45 and it's debt-equity ratio is 1.5. AMR has a much lower debt-equity ratio of 0.45 , which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 30 %, the risk-free rate is 5.5 %, and the expected return on the market portfolio is 11.4 %. Hint: find UAL's beta to help find AMR's beta.

a. Estimate AMR's equity cost of capital.

b. Estimate AMR's share price.