Amarindo, Inc.(AMR), is a newly public firm with 11.5 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $15.19 million, and you expect thefirm's free cash flows to grow by 3.8% per year in subsequent years. Because the firm has only been listed on the stock exchange for a shorttime, you do not have an accurate assessment ofAMR's equity beta.However, you do have beta data forUAL, another firm in the same industry.

Chart/Info Given: UAL..... Equity Beta: 1.20Debt Beta: 0.24Debt-Equity Ratio: 0.8

AMR has a much lowerdebt-equity ratio of 0.24, which is expected to remainstable, and its debt is risk free.AMR's corporate tax rate is 25%, the risk-free rate is 5.3%, and the expected return on the market portfolio is 10.9%.

a.EstimateAMR's equity cost of capital.

b.EstimateAMR's share price.