Question: Please help me with B. my answer for A. is correct. I need the answer to B. 9 Better Mousetraps has developed a new trap.

Please help me with B. my answer for A. is correct. I need the answer to B. Please help me with B. my answer for A. is correct. Ineed the answer to B. 9 Better Mousetraps has developed a new

9 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 to a value of zero, but in fact 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 35%, and the required rate return on the project is 9%. Use the MACRS depreciation schedule. 1 points Year: Sales millions of traps) 2. 0.8 1.0 Thereafter 6 0.6 1.6 0.9 0.6 eBook a. What is project NPV? (Do not round Intermediate calculations. Enter your answer in millions rounded to 4 decimal places.) Print NPV S 6.3802 million b. By how much would NPV increase if the firm depreciated its investment using the 5-year MACRS schedule? (Do not round intermediate calculations. Enter your answer in whole dollars not in millions.) The NPV increases by Year(s) 3 Year 1 33.33 44.45 14.81 7.41 5 Year 20.00 32.00 19.20 11.52 11.52 5.76 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17-20 21 Recovery Period Class 7 Year 10 Year 14.29 10.00 24.49 18.00 17.49 14.40 12.49 11.52 8.93 9.22 8.92 7.37 8.93 6.55 4.46 6.55 6.56 6.55 3.28 15 Year 5.00 9.50 8.55 7.70 6.93 6.23 5.90 5.90 5.91 5.90 5.91 5.90 5.91 5.90 5.91 2.95 20 Year 3.75 7.22 6.68 6.18 5.71 5.28 4.89 4.52 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 4.46 2.23 Notes: 1. Tax depreciation is lower in the first year because assets are assumed to be in service for 6 months. 2. Real property is depreciated straight-line over 27.5 years for residential property and 39 years for nonresidential property

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