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Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ 5 . 4 million. The

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, but, in fact, it can be sold after 6 years for $668,000. The firm believes that working capital at each date must be maintained at a level of 15% of next year's forecast sales. The firm estimates production costs equal to $1.60 per trap and believes that the traps can be sold for $6 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 9%.
\table[[Year:,0,1,2,3,4,5,6,Thereafter],[Sales (millions of traps),0,0.6,0.8,1.0,1.0,0.9,0.6,0]]
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.
Increase in NPV
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