Regina gas & oil needs to purchase equipment. The cost of the equipment is $15,000,000. It is estimated that the firm will save $2,175,000 annually (after-tax) for the next 10 years by making this investment. The firm is financed with 23% debt and 77% equity, based on market values. The firm's cost of equity is 8.5% and its pre-tax cost of debt is 4.75%. The flotation costs of debt and equity are 2.25% and 6.5%, respectively. Assume the firm's tax rate is 28%.

A. What is the firm's WACC?

B. Ignoring flotation costs and using your answer from part (a) as the discount rate, what is the NPV of the proposed project?

C. What is the weighted average flotation cost, fA, for the firm?

D. What is the dollar flotation cost of the proposed financing?

E. Including flotation costs what is the NPV of the proposed project?