Prime Emerald Inc. is an upscale rug manufacturer in Flint, Michigan. Recently many Prime investors have petitioned for the rug manufacturer to acquire a foreign retailer in China “Rug Emporium” despite the economic state due to their client base and recent need of cash flow. The price of the retailer will be 1.7 billion in the country’s currency, but it has come to the CFO’s attention that it may not be a bad idea to establish a subsidiary for Prime considering a subsidiary would generate a better NPV or net present value. Considering that China has many risks, Prime has a big decision on whether to acquire or start anew.
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