You are an analyst valuing Palm and Sun Industries for a possible acquisition. Below are pro forma estimates of unlevered free cash flow and interest tax savings for the 3-year planning period.Starting in year 4, you expect a constant growth rate of 3%, which is applicable to both equity- and debt-related cash flows.The unlevered cost of equity is 15% and the cost of debt is 8%.The tax rate is 35%.Cash flows are given in millions.

Year 1 Year 2 Year 3

Free Cash Flow 8 12 13

Tax Savings 2 1 1