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 to a value of zero, but in fact it can be sold after $6$

years for $$536,000.$ 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{.}10$ per trap and believes that the traps can be

sold for $$5$ 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

$10\%.$ Use the MACRS depreciation schedule.

Year:

Sales $($millions of traps$)$

a$.$ What is project NPV$?$

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

NPV

million

b$.$ 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.

The NPV increases by