erry’s sister, Brenda, has just started up a new construction company that specializes in the construction of commercial buildings. Jerry is extremely eager to see his sister’s company get off the ground and become successful. Two years ago, Brenda’s husband, Carl, 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 Carl’s injury, Brenda 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. Brenda has pledged to donate 10% of the net profits from her construction business to charity. Jerry knows that a $2,500,000 construction project could be life-changing for Brenda’s new company, Brenda’s family, and countless individuals impacted by the charitable organizations Brenda is involved with. Jerry could easily (and discreetly) increase the estimated future annual net cash flows for Johnson Manufacturing by a small amount (approximately $20,000 per year), thereby changing the results of the calculations supporting a different recommendation to the company’s board of directors. Explain why Jerry should or should not consider doing this.
erry’s sister, Brenda, has just started up a new construction company that specializes in the construction of commercial buildings. Jerry is extremely eager to see his sister’s company get off the ground and become successful. Two years ago, Brenda’s husband, Carl, 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 Carl’s injury, Brenda 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. Brenda has pledged to donate 10% of the net profits from her construction business to charity. Jerry knows that a $2,500,000 construction project could be life-changing for Brenda’s new company, Brenda’s family, and countless individuals impacted by the charitable organizations Brenda is involved with. Jerry could easily (and discreetly) increase the estimated future annual net cash flows for Johnson Manufacturing by a small amount (approximately $20,000 per year), thereby changing the results of the calculations supporting a different recommendation to the company’s board of directors. Explain why Jerry should or should not consider doing this.
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