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 ?$15.46 ?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:

            Equity Beta       Debt Beta         Debt-Equity Ratio

UAL          1.65                  0.33                          1.1

AMR has a much lower? debt-equity ratio of 0.33?, which is expected to remain? stable, and its debt is risk free.? AMR's corporate tax rate is 32?%, the? risk-free rate is 5.2?%, and the expected return on the market portfolio is 11.5%.

a. Estimate? AMR's equity cost of capital.

b. Estimate? AMR's share price.