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can you please do both parts Amarindo, Inc. (AMR), is a newly public firm with 10.0 million shares outstanding. You are doing a valuation analysis
can you please do both parts
Amarindo, Inc. (AMR), is a newly public firm with 10.0 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $15.18 million, and you expect the firm's free cash flows to grow by 3.6% 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 0.27 , which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 20%, the risk-free rate is 4.8%, and the expected return on the market portfolio is 10.6%. a. Estimate AMR's equity cost of capital. b. Estimate AMR's share price. a. Estimate AMR's equity cost of capital. The equity cost of capital is \%. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet Step by Step Solution
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