NPV of the proposed project is ($24,600) as calculated below

Target debt equity ratio = 0.6

If debt is 0.6, equity is 1
Therefore, total capital is 0.6+1 = 1.6
Weight of debt = debt/ total capital = 0.6/1.6 = 37.50%
Weight of equity = equity/total capital = 1/1.6 = 62.50%
Cost of equity is 15.00%
Cost of debt post tax is Interest rate x (1 - tax rate) = 8%*(1-35%) = 5.20%
WACC = Weight of debt x cost of debt post tax + Weight of equity x cost of equity
WACC = (37.50% x 5.20%) + (62.50% x 15%)
WACC = 1.95% + 9.375%
WACC =
11.325%

Year

Cash Flows

0
1
2
3

(500,000)
120,000
240,000
240,000

PVF*
@11.325%
1.0000
0.8983
0.8069
0.7248
***NPV

* PVF = 1/(1+WACC)^n
** PVCF = Cash Flows x PVF @11.325%
***NPV is the sum of PVCF for years 0-3

PVCF**
(500,000)
107,792
193,654
173,953
(24,600)