Year	1	2	3
Net Income	1,500,000	1,750,000	3,800,000
Depreciation	2,000,000	2,000,000	0
Debt (beginning of the year)	10,000,000	12,000,000	15,000,000

From year 3 on the unlevered cash flow is expected to perpetually grow at 3.00% (that is, the unlevered cash flow of year 4 will be 5% higher than in year 3 and so on). The depreciation will stay equal to 0 from year 3 on, and also debt will stay perpetually at 15,000,000 starting at the beginning of year 3. The debt variations are all scheduled beforehand, hence there is no uncertainty about them.

The interest rate is 2.55%, the unlevered return on equity is 7.50% and the depreciation tax shield is as risky as the companys debt. The tax rate is 40%.

a) What is the levered cash flow to equity holders in each one of the first three years?

b) What is the levered value of the companys assets?