Please look at cases 7-31 in your textbook (here attached). The case on Fore Corporation talks about the role of ethics when preparing a capital budget. Answer questions 1, 2, and 3. Here you can find a link to the IMA principles:

https://www.imanet.org/career-resources/ethics-center?ssopc=1

https://www.imanet.org/-/media/635508439d8848b89e544a4ac2888f88.ashx?la=en

connect Cases CASE 7-31 Ethics and the Manager The Fore Corporation is an integrated food processing company that has operations in over two dozen countries. Fore's corporate headquarters are in Chicago, and the company's executives frequently travel to visit Fore's foreign and domestic facilities. Fore has a fleet of aircraft that consists of two busin international range and six smaller turboprop aircraft that are used on shorter flights. Company policy is to assign aircraft to trips on the basis of minimizing cost; however, the practice has been to assign the aircraft based on the organizational rank of the traveler. Fore offers its aircraft for short-term lease or for charter by other org ver Fore itself does not plan to use the aircraft. Fore surveys the market often in or competitive. William Earle, Fore's vice preside as claimed that a third business jet can be justified financially. Page 392 However, some people in the controller's office have surmised that the real reason for a third business jet was to upgrade the aircraft used by Earle. Presently, the people outranking Earle keep the two business jets busy with the result hat Earle usually flies in smaller turbo prop aircraft. The third business jet would cost $11 mill diture of this magnitude requires a formal proposal with projected cash flows and net present value computations using Fore's minimum required rate of return. If Fore's president and the finance committee of the board directors appr the proposal, it will be submitted to the full board of directors. The board has final approval on res exceeding $5 million and has established a firm policy of rejecting any discretionary proposal that has a negative net present value. Earle asked Rachel Arnett, assistant corporate co ntroller, to prepare a proposal on a third business jet. Arnett gathered the following data: Acquisition cost of the aircraft, including instrumentation and interior furnishing Operating cost of the aircraft for company use. . Projected avoidable com re and other avoidable costs from company use of the plane. Projected value of execu he saved by using the third business jet . Projected contribution margin from incremental lease and charter activity. Estimated resale value of the aircraft. When Earle reviewed Arnett's completed proposal and saw the large negative net present value figure, he returned the proposal to Arnett. With a glare, Earle commented, "You must have made an error. The proposal should look better than that ." Feeling some pressure, Arnett went back and checked her computations; she found no errors. However, Earle's message was clear. Arnett discarded her projections that she believed were reasonable and replaced them with figures that had a remote chance of actually occurring but were more favorable to the proposal. For example, she used first-class airfares to refigure the avoidable commercial airfare costs, even though company policy was to fly coach. She found revising the proposal to be distressing. The revised proposal still had a negative net present value. Earle's anger was evident as he told Arnett to revise the proposal again, and to start with a $ 100,000 positive net present value and work backwards to compute supporting projections. Required: 1. Explain whether Rachel Arnett's revision of the proposal was in violation of the IMA's Statement of Ethical Professional Practice. 2. Was William Earle in violation of the IMA's Statement of Ethical Professional Practice by telling Arnett specifically how to revise the proposal? Explain your answer. . Identify specific internal controls that Fore Corporation could implement to prevent unethical behavior on the part of the vice president of finance. (CMA, adapted) CASE 7-32 Net Present Value Analysis of a New Product 2 LO7-2 Matheson Electronics has just developed a new electronic device it believes will have broad market appeal. The company has performed marketing and cost studies that revealed the following information: . New equipment would have to be acquired to produce the device. The equipment would cost $315,000 and have a six- year useful life. After six years, it would have a salvage value of about $15,000. b. Sales in units over the next six years are projected to be as follows: Year Sales in Units