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Examine the acceptability of the project in the case

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Problem 1: The CEO of Carrington Company is considering a five-year investment project of setting up a production factory in Shenzhen of China for manufacturing mobile phone. You are the financial manager of the company. Under this current situation of China, explain to the CEO the major considerations and problems associated in the estimation of cashflow of this project. The CEO knows that there are (Internal Rate of Return) IRR and (Net Present Value) NPV methods to evaluate the project. When would it be better to use IRR rather than NPV method to examine the acceptability of the project in this case? The CEO also asks if it is possible to have a positive initial cash flow at the beginning of the project. Explain whether it is possible or not and illustrate your explanation with example(s).

Reference no: EM132805717

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