The CEO of a car manufacturing firm in the UK was in conversation with her CFO about the idea of setting up a new plant for gasoline-based vehicles. "Given the uncertainty vis-a-vis global oil prices and the pandemic, I think we should use different investment appraisal techniques to rigorously evaluate the proposal before making a decision", suggested the CFO. The CEO, who was keen to set up the new plant, wasn't happy with the suggestion. She responded, "What is the point of using any investment appraisal technique in the current situation when there is so much global uncertainty? The new plant will add so much to the prestige of the firm. It will motivate our employees and send a signal to the market that we are a vibrant firm. We should simply go for it. Once the world comes out of the current gloomy situation, our new plant will be ready for production, and we will be in a good position to exploit the market conditions.

Required: a) Critically discuss and explain, why do you (dis)agree with the statement made by the CEO? (35 marks)