3. Problem 17-03 (Compressed APV Model with Constant Growth) Compressed APV Model with Constant Growth An unlevered firm has a value of $850 million. An otherwise identical but levered firm has $70 million in debt at a 4% interest rate, which is its pre-tax cost of debt. Its unlevered cost of equity is 12%. After Year 1, free cash flows and tax savings are expected to grow at a constant rate of 3%. Assuming the corporate tax rate is 35%, use the compressed adjusted present value model to determine the value of the levered firm. (Hint: The interest expense at Year 1 is based on the current level of debt.) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55 . Do not round intermediate calculations. Round your answer to two decimal places. $ million