Dee's Toys is considering a project that will cost $1 million. This project will generate after-tax cash flows of $310,500 per year for 5 years. The firm's target D/E ratio is 0.25. The flotation cost for equity is 5%, and the flotation cost for debt is 3%. Which of the following statement is correct, assuming discount rate is 11%? I. an increase in D/E ratio will increase the NPV of this project. II. the firm should accept this project because it will generate a positive NPV of $99,348.99 after considering flotation cost. III. the firm should accept this project because it will generate a positive NPV of $35,017.22 after considering flotation cost. IV. the NPV of this project will increase if the cost increases.