Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6 million. The equipment will be depreciated straightline over 6 years to a value of zero, but in fact it can be sold after 6 years for $510,000. The firm believes that working capital at each date must be maintained at a level of 10% of next years forecast sales. The firm estimates production costs equal to $1.40 per trap and believes that the traps can be sold for $4 each. Sales forecasts are given in the following table. The project will come to an end in 5 years, when the trap becomes technologically obsolete. The firms tax bracket is 30%, and the required rate of return on the project is 16%.

Year:	0	1	2	3	4	5	6	Thereafter
Sales (millions of traps)	0	0.5	0.6	1.1	1.1	0.6	0.2	0

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? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in dollars rounded to 2 decimal places.)

Increase in NPV

$