acebook X ) Home | myLU X Lu Homework: Discount Cash-Flow x Question 9 - Homework: Discour X Johnny's Lunches is considering | X C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252FIms.mheducation.com%252Fmghmiddleware%252Fmheprodu pps ESPN: The Worldwi... Shalimar Weather -... G Google https://searchsafe.n.. New Tab Bookmarks Homework: Discount Cash-Flow Analysis Assignment i Saved 9 Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight line over 6 years to a value of zero, but in fact it can be sold after 6 years for $606,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estimates production costs equal to $1.70 per trap and believes that the traps can be sold for $7 each. Sales forecasts are given in the following points table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm's tax bracket is 35%, and the required rate of return on the project is 12%. Use the MACRS depreciation schedule. Skipped Year : 4 5 6 Thereafter Sales (millions of traps) 0 0.5 0 . 7 0 .9 0 . 9 O . 0. 3 eBook Print a. What is project NPV? (Do not round intermediate calculations. Enter your answer in millions rounded to 4 decimal places.) NPV million b. By how much would NPV increase if the firm depreciated its investment using the 5-year MACRS schedule? (Do not round intermediate calculations. Enter your answer in whole dollars not in millions.) The NPV increases by Mc Gra Hill