4. Webley Motors, a manufacturer of small gas engines, has been working on a new design for several years. It’s now considering going into the market with the new product, and has projected future sales and cash flows. The marketing and finance departments are putting together a joint presentation for the board of directors that they hope will gain approval for the new venture. Part of the presentation is a capital budgeting analysis of the project that includes only estimated future costs and revenues. Dan Eyeshade, the head of investor relations, insists that calculations shown to the board include the money spent on research in the past several years. He says that to ignore or omit those costs would be deceiving the board about the true cost of the project, which would be both unethical and legally dangerous.

Comment on Dan’s position. If you disagree, prepare an argument that will convince him to change his mind, and suggest an alternative presentation that will satisfy you both.