1. Joe’s sister, Beth Harding, has just started up a new construction company that specializes in the construction of commercial buildings. Joe is extremely eager to see his sister’s company get off the ground and become successful. Two years ago, Beth’s husband, Tim, was severely injured during combat while serving with the United States Army and is totally and permanently disabled as a result of his injuries. Since Tim’s injury, Beth has become very involved with the Wounded Warrior Project, serving as Chairman for the charitable organization’s local chapter. She is also involved with several other charities in the area that provide food and other necessities to the homeless. Beth has pledged to donate 15% of the net profits from her construction business to charity. Joe knows that a $1,000,000 construction project could be life-changing for Beth’s new company, Beth’s family, and countless individuals impacted by the charitable organizations Beth is involved with. Joe could easily (and discreetly) increase the estimated future annual net cash flows by a small amount (approximately $8,000) and change the results of the calculations supporting a different recommendation to Ace Manufacturing’s board of directors. Explain why Joe should or should not consider doing this. Your explanation should be one-half page to one page long (double-spaced) and should include adequate reasoning supporting your conclusion after considering all of the circumstances.

Answer rating: 100% (QA)

In the given case Joe wants to manupulate the estimated future net cash flows to help Beth and her c... View the full answer