• As a Neptune Holdings Plc junior management accountant, the Finance Director wants your calculations and recommendation regarding an expansion plan the Board is considering, which includes a chain of factory outlet stores. Below are the figures for the first one that is planned for a central Manchester location next year. Company policy dictates that any decision should be based on the results of calculating Net Present Value (NPV) of 3 years of cash flows using a cost of capital of 12%, Payback Period (PBP) must be less than 3 years, and the Internal Rate of Return (IRR) of the project should provide a 5% cushion in case of increases in inflation or interest rates. The initial investment investment consists of £100,000 for the land, building costs of £158,000, and £36,600 for fittings and equipment. The cash flows in year 1 are expected to be: total sales revenue £600,600; the cost of Alpha products sold £165,900; Beta stock sold £118,860; staff costs £24,780; light & heat £35,196; other overheads £134,904. The cash flows for years 2 and 3 are the same as those in the first year, however expected increase by 2% inflation each year.