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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 $ million. The equipment will be depreciated straightline over years, but, in fact, it can be sold after years for $ The firm believes that working capital at each date must be maintained at a level of of next year's forecast sales. The firm estimates production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales forecasts are given in the following table. The project will come to an end in years, when the trap becomes technologically obsolete. The firm's tax bracket is and the required rate of return on the project is tableYear:ThereafterSales millions of traps 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 decimal places. Increase in NPV :
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $ million. The equipment will be depreciated straightline over years, but, in fact, it can be sold after years for $ The firm believes that working capital at each date must be maintained at a level of of next year's forecast sales. The firm estimates production costs equal to $ per trap and believes that the traps can be sold for $ each. Sales forecasts are given in the following table. The project will come to an end in years, when the trap becomes technologically obsolete. The firm's tax bracket is and the required rate of return on the project is
tableYear:ThereafterSales millions of traps
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 decimal places.
Increase in NPV :
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