4. Tablet Company is looking to set up a wholly owned subsidiary firm, which will sell cheap, rugged computers in developing countries. The debt schedule for the firm is predetermined and shown below for years 0, 1, and 2. After year 2, the firm will maintain a fixed level of debt equal to 700. The free cash flows of the firm for years 0 to 2 are as follows: 2 Year 0 1 2 FCF 150 200 Debt 900 800 700 Assume that after year 2 the FCFs grow at a rate of 2% each year. The unlevered cost of capital is 17%, the return on debt is 8%, and the tax rate is 40%. (a) Calculate the terminal value of the project as of year 2. Be sure to include the value of the tax shield in your calculations. (b) Use the Adjusted Present Value (APV) method to calculate the levered value of the firm as of year 0 and year 1. (c) What is the value of the firm's equity as of years 0, 1, and 2? (Hint: Remember that V = D+E)