Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $$6$ million. The equipment will be depreciated straight line over $6$ years to a value of zero, but in fact it can be sold after $6$ years for $$500,000.$ 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\mathrm{.}50$ per trap and believes that the traps can be sold for $$4$ each. Sales forecasts are given in the following table. The project will come to an end in $6$ years, when the trap becomes technologically obsolete. The firm$$s tax bracket is $35\%,$ and the required rate of return on the project is $12\%.$ Use the MACRS depreciation schedule. What is the NPV to $4$ decimal points? 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 straight line over $6$ years to a value of zero, but in fact it can be sold after $6$ years for $$500,000.$ 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 $$1\mathrm{.}50$ per trap and believes that the traps can be sold for $$4$ each. Sales forecasts are given in the following

table. The project will come to an end in $6$ 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.

Year: $0123456$ Thereafter

Sales $($millions of traps$)00\mathrm{.}50\mathrm{.}61\mathrm{.}01\mathrm{.}00\mathrm{.}60\mathrm{.}20$