Capital Budget - Case Study Example

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Leland Forrest could consider the directives of Rolland to repress the findings of the net present value analysis keeping in view the following ethical standards and their relevance to the situation.
Integrity: Rolland’s decision not to disclose the information is…
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Capital Budget case study
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Instant Dinners Inc. Instant Dinners Inc The Net Present Value obtained on the basis of the revised estimates is negative $590,280 (See Attached Excel File).
2. Leland Forrest could consider the directives of Rolland to repress the findings of the net present value analysis keeping in view the following ethical standards and their relevance to the situation.
Competence: The directive of Rolland to repress findings of NPV analysis is against this standard. It has negative implications for the business.
Confidentiality: Leland needs to maintain confidentiality. However, she cannot hold back information that has negative implications for the business from the board of directors
Integrity: Rolland’s decision not to disclose the information is challenging integrity of his position in the company. It could raise a conflict of interests as Rolland wants to pursue the investment despite its negative implications for the business.
Creditability: It is Rolland’s responsibility to communicate the information derived from the analysis to the board of directors so that they could make decision that is in the best interest of the company.
3. Leland Forrest to maintain professionalism and perform her duties according to the professional standards. The information presented by Leland is based on reasonable revised estimates about the possible investment in the conveyor belt. Therefore, it is the professional obligation of Leland not to hide the analysis report and disclose the outcome of NPV analysis. The analysis report has implications for the company and its decision to go ahead with the purchase of the conveyor belt. Leland must not hesitate to disclose the information to the board of directors, which is responsible for making strategic decisions. Read More
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