What Is The ROI of Project ZM Based On The Initial Estimates [PDF]

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MERCADO, Erica Kaye M. A2B



December 9, 2019 COSTRAM



1. What is the ROI of project ZM based on the initial estimates? What would the ROI be if the income rose to $2.34 million? Return on Investment (Initial Investment)



$ 1,870,000.00 $ 15,600,000.00 0.1199 11.99%



Return on Investment (Mel's Estimates))



$ 2,340,000.00 $ 15,600,000.00 0.15 15%



2. Do you agree that Jason has an ethical dilemma? Explain. Is there any way that Mel could ethically justify raising the sales estimates and/or lowering expense estimates? With how he handles the projection, Jason is definitely facing an ethical dilemma. Considering the figures present with the sales and expense, it is true that these projections are estimates. And as a matter of fact, these projections were the best ones available to him. If he uses a sales revenue projection from the top end of the range, he will be deliberately basing the ROI estimate on a highly unlikely sales figure. The present projections on sales and expense are not fantasy or fictitious figures; in fact, they are supposed to be management’s best estimate of what will actually happen. If Jason prepares the report in accordance with Mel’s desires, he will be knowingly fabricating the data with regards to the projections presented. One may be wondering whether or not Mel’s initiative to ‘back-up’ Jason is sufficient to let Jason off the hook or practically fabricate the data. Actually, it is not. If Mel is the one eager to have false projections badly enough, then he should be the one signing it. Consequences to the actions are determining factors, Jason may have thought he had his dream job, but it is about to turn into a nightmare if he will be following Mel’s orders. Companies don’t take kindly to employees who lie, and this lie is sure to come out for projections are basis of overall operations. If the project is approved, and the sales do not approach $2.34 million as how Mel offered, you can bet that the vice president of sales will be quick to confront Jason pointing out that she predicted only $1.87 million. With situations like this, Mel will surely pin the blame directly on Jason, the one who signed and whose name is on the report.



MERCADO, Erica Kaye M. A2B



December 9, 2019 COSTRAM



3. What do you think Jason should do? Explain. Jason should prepare the report free from biases and errors offered by Mel. He should report it according to the figures he had projected. These figures are most descriptive of the project’s potential. As the one assigned to it, he should feel free to include information about the predicted range of sales and to point out any other information that reflects favorably on the project. This is the common in practice, as the one assigned to do reports, he should be realistic on projections or it will be the basis of overall operations. If Mel, as Jason’s superior would continue to order him with doing inappropriate measures, then Jason should think twice of staying with the company, or better yet, look for another job.



MERCADO, Erica Kaye M. A2B



December 9, 2019 COSTRAM