Inflating Value Essay Example | Topics and Well Written Essays - 750 words

Inflating Value - Essay Example One ethical issue that prevails in Jack’s case is the conflict of interest regarding the moral uprightness in professional undertakings. Apparently, there are conflicting values as to whether Jack should prioritize professional integrity, or whether he should prioritize the interests of his superiors. Apparently, changing the peer group would undervalue ABC Lighting and increases the potential of upsetting superiors, especially the managing director and the client; hence compromising Jack’s prospects of being touched by the investment bank after graduation. On the contrary, knowingly inflating the value of the company constitutes the lack of integrity in duty performance. In essence, conflicts of interest emerge whenever employees feel obliged to please and respect a rigid chain of command within an organization. When under conflicts of interest, employees are expected to uphold the ethical principle of integrity.Apparently, the investment bank has an extremely strict c hain of command. In such organizational cultures, subordinate employees can only report to their immediate superiors. Therefore, Jack should report the issue to David, his Associate. As a financial analyst, Jack is professionally obliged to perform his duties in an objective and accurate manner. Therefore, he should mention that to the best of his knowledge, the peer group selected for the valuation exercise by his Associate is not accurate, and that he is technically conflicted as to whether due diligence should be followed in selecting companies to form the right peer group.

Russban Plastics Essay Example | Topics and Well Written Essays - 1000 words

Russban Plastics - Essay Example It means that Jack together with the minor shareholders will not be able to vote for the approval of the company's dissolution; he needs to be in agreement with Ben. Therefore, Andy and Ben will be able to continue their business. However, it is recommended to negotiate with Jack and other shareholders, because their strong dissatisfaction may lead to opposition to approval of the investment decisions and bring company to a halt. 3. In order to buy out the shareholders and remaining shares at par value, and to obtain a full control over the Russband's operations, a loan of ( 120,000 - 60,000 - 21,000) + ( 250,000 - 160,000) = 169, 000 will be necessary. The bank will not have a positive view of the loan, as the amount of the loan is quite substantial, and the company's expansion plans would have to be shelved for another year. It means, at least, two more consequent years of losses and there is no proof that the market conditions afterwards will be favourable and allow achieving considerable profits. Whether the loan will be granted will depend on Ben and Andy's ability to provide a sound financial plan indicating that the company in the future will be able to generate enough cash to make principal and interest payments, and on the presence of appropriate collateral. Russban Plastics has sufficient authorized capital, more than 25% of it issued and satisfactory amount of the paid-up capital. To change the status from private to a PLC company it will need to seek certificate of trading and incorporation from the authorities before starting the financing activities. Afterwards, it will also need to submit latest financial reports and made the news and information that are likely to affect the price available to the market. In order to join AIM the company will need to: Appoint an advisor and a broker; Submit a declaration of business interest; Submit an admission document; Pay admission fee of 4,000; Incur the advisor's fees ranging from 300,000 up to 1,000,000 and 2%-5% flotation cost. Generally speaking, while going public offers an opportunity to raise a significant amount of additional funding, it will require substantial spending of the management time and costs. 5. The incremental investment amount, taking into account sale of the existing premises for 500,000, would be equal to 500,000. According to the Gordon Growth Model cost of equity will be equal to: Ce = D1/p0 + g = (50 p*0.06* (1 + 0.01))/50 p + 1% = 7.1% Considering also cost of