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0 Total marks forecasts are reliable, Mary agreed to go over the forecasts one more time. Being a team player is important to Mary because

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0 Total marks forecasts are reliable, Mary agreed to go over the forecasts one more time. Being a team player is important to Mary because she wants to move up the corporate ladder as quickly as possible, and she believes that her rise to the executive suite will be enhanced if she cooperates with her superiors, including the investment officer. Because she set up her forecast on a spreadsheet, Mary knew it would be easy to change the growth rate of sales to get new cash flow forecasts for the synthetic steel. However, Mary did not think that growth rates higher than the ones she used in her original forecasts could be achieved, even if the synthetic steel proved to be a huge success. Despite this, she used the higher growth rates that the investment officer had suggested and generated a new set of forecasted cash flows for the synthetic steel. Even though she is convinced that the new growth rates are likely not attainable, Mary sent her new forecasts to the investment office a little while ago. She figured, What's the difference? I don't make the final decision anyway QUESTION ONE Serina Bay Valley (SBV) Lid is evaluating whether it should produce a new synthetic steel that will require billions of dollars to develop. According to Bill Bates, the CEO of SBV LTD, the syn thetic steel should substantially boost both the sales and net income of SBV Lid. Mary, who has worked in the capital budgeting area for six years, has been asked to estimate the relevant cash flows that the synthetic steel is expected to generate. During the past few weeks, Mary has had quite a few conversations with the company's engi neers, production manager and vice president of marketing. With the information she compiled through her conversations with the aforesaid people and additional information she received from independent sources, Mary put together a detailed forecast of the synthetic steel's relevant cash flows. The final report, which includes only the forecasted cash flows and explanations for the forecasts, was submitted to the chief investment officer yesterday. The report does not include NPV or IRR analysis of the new product because such analyses are conducted by the investment officer 1. Identify the ethical dilemmas in the above stated situation 2. Was it appropriate for the investment officer to request Mary to change her cash flow ess- mates? 3. Was it appropriate for Mary to change her cash flow estimates? 4. What would you do if you were Mary? (12+ 3+ 12 + 2 ...../9 Marks) QUESTION ONE Provide your answer below. Today, the investment officer called Mary to tell her that he thought that the forecasts she sub- mitted were incorrect. Mary explained that her forecasts were based on a large amount of data that she had collected and corroborated in combination with analysts' predictions concerning the potential success of the synthetic steel. As she told the investment officer, her forecasts were based on optimistic growth rates in sales for the synthetic steel during the next 15 years. The investment officer said that he thought the growth of such a revolutionary product could be higher than Mary estimated. The investment officer asked her to reconsider her cash flow estimates Amhough she had reviewed the numbers dozens of times and Mary is convinced that her 0 Total marks forecasts are reliable, Mary agreed to go over the forecasts one more time. Being a team player is important to Mary because she wants to move up the corporate ladder as quickly as possible, and she believes that her rise to the executive suite will be enhanced if she cooperates with her superiors, including the investment officer. Because she set up her forecast on a spreadsheet, Mary knew it would be easy to change the growth rate of sales to get new cash flow forecasts for the synthetic steel. However, Mary did not think that growth rates higher than the ones she used in her original forecasts could be achieved, even if the synthetic steel proved to be a huge success. Despite this, she used the higher growth rates that the investment officer had suggested and generated a new set of forecasted cash flows for the synthetic steel. Even though she is convinced that the new growth rates are likely not attainable, Mary sent her new forecasts to the investment office a little while ago. She figured, What's the difference? I don't make the final decision anyway QUESTION ONE Serina Bay Valley (SBV) Lid is evaluating whether it should produce a new synthetic steel that will require billions of dollars to develop. According to Bill Bates, the CEO of SBV LTD, the syn thetic steel should substantially boost both the sales and net income of SBV Lid. Mary, who has worked in the capital budgeting area for six years, has been asked to estimate the relevant cash flows that the synthetic steel is expected to generate. During the past few weeks, Mary has had quite a few conversations with the company's engi neers, production manager and vice president of marketing. With the information she compiled through her conversations with the aforesaid people and additional information she received from independent sources, Mary put together a detailed forecast of the synthetic steel's relevant cash flows. The final report, which includes only the forecasted cash flows and explanations for the forecasts, was submitted to the chief investment officer yesterday. The report does not include NPV or IRR analysis of the new product because such analyses are conducted by the investment officer 1. Identify the ethical dilemmas in the above stated situation 2. Was it appropriate for the investment officer to request Mary to change her cash flow ess- mates? 3. Was it appropriate for Mary to change her cash flow estimates? 4. What would you do if you were Mary? (12+ 3+ 12 + 2 ...../9 Marks) QUESTION ONE Provide your answer below. Today, the investment officer called Mary to tell her that he thought that the forecasts she sub- mitted were incorrect. Mary explained that her forecasts were based on a large amount of data that she had collected and corroborated in combination with analysts' predictions concerning the potential success of the synthetic steel. As she told the investment officer, her forecasts were based on optimistic growth rates in sales for the synthetic steel during the next 15 years. The investment officer said that he thought the growth of such a revolutionary product could be higher than Mary estimated. The investment officer asked her to reconsider her cash flow estimates Amhough she had reviewed the numbers dozens of times and Mary is convinced that her

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