Galloway Corporation is considering whether to launch a new product line of pre-fabricated storage garages. The total

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Galloway Corporation is considering whether to launch a new product line of pre-fabricated storage garages. The total investment needed to undertake the project is $5,000,000. This amount will be depreciated straight-line to zero over the 5-year life of the equipment. The salvage value is zero, and there are no working capital consequences. Galloway has a required return of 20 percent on new projects and is taxed at 25%. The selling price will be $60,000 per garage. The variable costs will be about half that or $39,000 per garage, and fixed costs will be $655,000 per year. Beginning in year three (3), the variable costs are expected to decrease by 5% per year due to the firm gaining comfort in the new process. Please show all your work in a spreadsheet. All totals should be formula based (i.e. PV, NPV, Total Cash Flow, etc…)

Using the template below, please provide/calculate the following: The NPV of the project at 100 units. The NPV of the project at 150 units  The Financial (i.e. economic) breakeven in units. Assume the 100 and 150 units are produced through the lifetime of the project (not yearly)

1 Required Return 20% 2 Tax Rate 25% 3 Discount Rate 9.5% 4 Net Present Ve 5 IRR A #NUM! ! 67 @ 100 units ######### Revenue