AC 504 Assignment 2: Board
Recommendation and Cost/Benefit Analysis
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AC 504 Assignment 2: Board Recommendation and
Cost/Benefit Analysis
Read the Ethics Case, The Kardell Paper Co., on pages
213–215 of your text.
Using the Modified 5-Question Approach, analyze the ethicality
of the decision to (or not to) incorporate the new technology and make a fully
supported recommendation to the Board of Directors. Supplement this analysis
with a Cost-Benefit Analysis (CBA) table.
You will need to reference your CBA in your recommendation to
the Board. Make sure you thoroughly detail your recommendation with reflections
on the consequences of the decision, whether the decision is fair to all, and
whether the decision demonstrates the virtues expected of the Board of
Directors, taking relevant codes of conduct into consideration, and the company
as a whole in terms of social responsibility.
The following information and assumptions should be used to
complete the Cost-Benefit Analysis:
·
Annual Revenues from
the mill average 625 million.
·
Profit margin from the
mill is approximately 11%.
·
Implementing the new
technology would take two full years. The first year, the company would
operation at 65% capacity (assume the company could maintain the 11% profit
margin during reduced operations). During the second year, it would need to be
completely shut down. After the two year period, the mill could reopen and
operate at pre-implementation levels.
·
Approximate cost of
litigation including medical costs for all affected by the contamination,
environmental sanctions, legal and court costs, victims’ pain & suffering,
and several other items is 1.7 billion. Estimate present value of future costs
at 20%.
·
The company would
spend approximately 4 million in hiring, onboarding, and training new employees
after reopening as a result of several of their existing employees having to
seek employment elsewhere during the shutdown.
·
As a result of the
layoffs and shut down, the local economy would suffer greatly. The community would
be forced to implement a 3 year tax on all local business profits of 5%. The
tax would be enforced for 3 years beginning after the reopening of the mill.
(Assume pre-implementation profit margins when calculating this ad dit/lude all
other costs and taxes when preparing this analysis.
Your recommendation should be addressed to the Board of
Directors. It should be 4-6 pages long (including the CBA and a reference
page). Your paper should be APA compliant.
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