P18-14 (similar to) Question Help 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 $14.92 million, and you expect the firm's free cash flows to grow by 4.4% 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: B. AMR has a much lower debt-equity ratio of 0.42, which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 30%, the risk-free rate is 5.2%, 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. i - X Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Equity Beta Debt Beta Debt-Equity Ratio UAL 2.10 0.42 1.4 Print Done P18-14 (similar to) Question Help 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 $14.92 million, and you expect the firm's free cash flows to grow by 4.4% 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: B. AMR has a much lower debt-equity ratio of 0.42, which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 30%, the risk-free rate is 5.2%, 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. i - X Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Equity Beta Debt Beta Debt-Equity Ratio UAL 2.10 0.42 1.4 Print Done