I saw your other post about not receiving an answer to these problems, so here I am. I think it's too late to help with your hw, but maybe this answer will benefit you in the future.
A negative NPV means you would lose money on the project, investment, underlying asset, etc. This just means that your initial payment is greater than the cash flows yielded from the project down the road. However, this only refers to the measurable, monetary benefits. A project may end up being positive when other things are taken into account (goodwill, free advertising, etc.).
The best way to do this particular problem is in Excel or a like program. For each year, calculate the After Tax CF in that year, then discount at your WACC to present value. So, it sounds like you were on the right track.
Each Year Consists of:
=EBT (Earnings Before Taxes)
-Taxes (assumed 0 for taxes if EBT is negative)
=EAT(Earnings After Taxes)
While year 12 or t12 also contains the profit from the sale of the asset at the end of the year.
The initial cost is $35,000,000 and interest payments are 8% for a payment of $2,800,000 each year. In all reality, if you borrowed the money in bonds at t0, you would pay the interest through t12 and then pay back the principle at t12. This means the amount you repay (in terms of today) is $35,000,000/(1+.06)^12 = $17,393,928 (this is your CF0).
Discount Rate(r)= WACC= (Cost of Debt)*(1- Tax Rate)= .08*(1-.25)=.06
See the attached image for the spreadsheet I made and numbers that I got. In the end, I had a positive NPV: $3,106,710. I hope I'm not missing information or assuming something I'm not supposed to assume.