Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.3 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 $549,000. 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 $1.60 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 firms tax bracket is 35%, and the required rate of return on the project is 10%. Use the MACRS depreciation schedule.

Year:	0	1	2	3	4	5	6	Thereafter
Sales (millions of traps)	0	0.6	0.8	1.0	1.0	0.5	0.3	0

What is project NPV?

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

By how much would NPV increase if the firm uses double-declining-balance depreciated with a later switch to straight-line when remaining project life is only two years?

Note: Do not round intermediate calculations. Enter your answer in whole dollars not in millions.

MARCS Depreciation Schedule

Year(s)	Recovery Period Class
3 Year	5 Year	7 Year	10 Year	15 Year	20 Year
1	33.33	20.00	14.29	10.00	5.00	3.75
2	44.45	32.00	24.49	18.00	9.50	7.22
3	14.81	19.20	17.49	14.40	8.55	6.68
4	7.41	11.52	12.49	11.52	7.70	6.18
5		11.52	8.93	9.22	6.93	5.71
6		5.76	8.92	7.37	6.23	5.28
7			8.93	6.55	5.90	4.89
8			4.46	6.55	5.90	4.52
9				6.56	5.91	4.46
10				6.55	5.90	4.46
11				3.28	5.91	4.46
12					5.90	4.46
13					5.91	4.46
14					5.90	4.46
15					5.91	4.46
16					2.95	4.46
17-20						4.46
21						2.23

Notes: 1. Tax depreciation is lower in the first year because assets are assumed to be in services for 6 months. 2. Real property is depreciation stright-line over 27.5 years for residential property and 39 years for nonresidential property.