Instant Dinners, Inc. (IDI), is in the business of manufacturing microwavable frozen foods. However, recent competition from
Question:
Instant Dinners, Inc. (IDI), is in the business of manufacturing microwavable frozen foods. However, recent competition from the "vacuum packed, store it on the shelf"
food manufacturers has necessitated a look at all of IDI's divisions. West Division is in a little financial trouble much to the dismay of Jackie Johnson, IDI's chief financial officer. Jackie has many friends at West, and is anxious to save the division. She assigns Bob Furlow, a member of the planning and analysis staff, to investigate the possibility of installing a conveyor belt automation system to replace the forklift and their operators. She has provided Bob with estimates of costs, increased sales revenue, and so on. Bob uses these figures and determines that the project has a very positive net present value. Jackie is quite pleased with the results and Bob's work.
Bob, however, decides to investigate the equipment for himself. His research reveals that Jackie had overestimated the useful life of the conveyor belt automation system, as well as its residual value. Bob recomputed his NPV analysis and presented his results to Jackie. Jackie ordered him not to discuss this revised NPV analysis with anyone at IDI, especially those on the board who will vote on the proposal.
a. How should Bob Furlow evaluate Jackie Johnson's order to repress the revised NPV analysis? Is it ethical?
b. How should Bob resolve this issue?
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