Davidson Installers wants to purchase $1,245,300 of new equipment in order to lower annual operating costs by $305,000. The equipment will be depreciated straight-line to a zero book value over its 6-year life, and then sold for $241,200. The company must hold an extra $62,200 of inventory during the project. The company has a target debt-equity ratio of 0.62. Their cost of equity is 13.3, and the pretax cost of debt is 8.6. Assume a 21 percent tax rate. Calculate the project's NPV.

WACC= %

NPV= $

Now suppose that Davidson Installers needs to raise external financing in order to purchase the new equipment. The company's flotation cost for equity is 7.30 percent, and 5.15 percent for debt. Calculate the new NPV for the project.

Average flotation cost = %

NPV = $