Chapter 15 Capital Budgeting 45. LO.2 & LO.3 (Time line; payback; NPV) Holly's Fashions is considering expandi its building so it can stock additional merchandise for travelers and tourists. Store man ager Jill Eliason anticipates that building expansion costs would be $190,000. Th firm's suppliers are willing to provide inventory on a consignment basis so there would be no additional working capital needed upon expansion. Annual incremental fixed cash costs for the store expansion are expected to be as follows: Year Amount 1 $20,000 27,000 27,000 27,000 30,000 30,000 30,000 33,000 2 4 5 7 8 Eliason estimates that annual cash inflows could be increased by $60,000 of contribu tion margin generated from the additional merchandise sales. Because of uncertainty about the future, Eliason does not want to consider any cash flows after eight years The firm uses an 8 percent discount rate a. Construct a time line for the investment b. Determine the payback period. (Ignore taxes.) Calculate the net present value of the project. (Ignore taxes.)