Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $$6\mathrm{.}3$ million. The equipment will be depreciated straight$-$line over $6$ years, but, in fact, it can be sold after $6$ years for $$694,000.$ The firm believes that working capital at each date must be maintained at a level of $10\%$ of next year$$s forecast sales. The firm estimates production costs equal to $$2\mathrm{.}00$ per trap and believes that the traps can be sold for $$8$ each. Sales forecasts are given in the following table. The project will come to an end in $6$ years, when the trap becomes technologically obsolete. The firm$$s tax bracket is $40\%,$ and the required rate of return on the project is $10\%.$

Year: $0123456$ Thereafter

Sales $($millions of traps$)00\mathrm{.}40\mathrm{.}50\mathrm{.}60\mathrm{.}60\mathrm{.}80\mathrm{.}50$

Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV$?$

Note: Do not round your intermediate calculations. Enter your answer in millions rounded to $4$ decimal places.Better Mousetraps has developed a new trap. It can go into production for an initial investment in

equipment of $$6\mathrm{.}3$ million. The equipment will be depreciated straight$-$line over $6$ years, but, in fact,

it can be sold after $6$ years for $$694,000.$ 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 $$2\mathrm{.}00$ per trap and believes that the traps can be sold for $$8$ each. Sales forecasts are

given in the following table. The project will come to an end in $6$ years, when the trap becomes

technologically obsolete. The firm's tax bracket is $40\%,$ and the required rate of return on the project

is $10\%.$

Suppose the firm can cut its requirements for working capital in half by using better inventory

control systems. By how much will this increase project NPV$?$

Note: Do not round your intermediate calculations. Enter your answer in millions rounded to $4$

decimal places.

Answer is complete but not entirely correct.

Increase in NPV

$0\mathrm{.}0626$ million