Introduction Cruickshank, Garth & Romano is a new real estate appraisal and consulting firm. Richard Romano, a principle of the firm, had just completed a preliminary evaluation of a property for a new client, Watson & Musico. However, his client refuses to accept the appraisal and requested the value be increased by $4.5 million or else they would take their business elsewhere. Richard's decision on his client's estimate could have great impact on Cruickshank, Garth & Romano's success and its ability to develop new clients. The new firm could ill-afford to pass up on doing Watson & Musico's business but Richard also wanted to complete the appraisal according to his best estimate of the current market value of the property. This paper will analyze the ethical issues and alternatives for this case. Stakeholders John Mortimer controls Watson & Musico Developments and is well known for his abrasive style and aggressive approach in business dealings. His firm is rumoured to have a highly restricted cash flow because of its aggressive leasing policy. Because of the depressed real estate market, Mortimer is refinancing all of its properties to reduce its debt service requirements and to generate cash. Since, the amount that could be borrowed from the bank is positively correlated with the appraised value, Mortimer would like his property to be valued as high as possible. Therefore, he would want Richard to value his property at his requested value of $35 million. Richard Romano is one of the three principals at Cruickshank, Gath, & Romano. With eight years of experience and recognized by industry insiders as one of Canada's leading real estate experts, Richard wants to complete the appraisal according to his best estimate of the pro... ... middle of paper ... ...tive Although, Watson & Musico may take their business elsewhere, Richard should refuse to raise the value. Complying to AIC's Code of Ethics is something that he has control over while how Mr. Mortimer chooses to react to this decision is out of his control. As well, Richard would be more reputable and trusted among financial institutions. If Mr. Mortimer does give Cruickshank, Garth & Romano a reputation for being difficult, Richard and his partners could counter it by marketing their firm's strong commitment to being accurate and truthful in their calculations along with the high possibility that banks are likely to accept their appraisal value. This marketing strategy would not only separate them from some of their competitors, it would also surely attract the attention of potential clients who highly values integrity and not just their business's financials.
In existence is $150,000, specifically set aside for the purchase of distressed real estate. This essay will outline a detailed strategy ensuring a maximum return in regard to the financial investment made on the home. Including a description of distressed real estate and foreclosure in addition to how utility can play a role in the decision-making process.
Is ethics concerning decision making merely an accepted way of life, a trust factor, or a concern for reputation? Is ethical thinking and decision making conclusions right for one individual or firm and wrong for another? Do ethics encompass a universal concept or do they reside solely in an individual realm such as one’s Id or ego as Freud claimed? Finally, do acts such as The Sarbanes-Oxley Act (SOX) create a sound solution to the problem of ethical or non-ethical decision making in public firms?
Being the CEO of Countrywide Financial, it would be my responsibility to provide quality mortgage services to our customer and keeping our processes ethically sound. In order to make sound loan decisions, we must have established guidelines that all of our loan originators follow. I do believe that every case deserves its own individualized decision based on the specifics of the application, but we should have a base that we all follow. The appraisers we work with should also have a similar code of ethics. We would not want to have established a solid process only to not have ethical supporting teams that we do business with outside our organization. We will need to provide our loan originators with the training they need to do the job
Janice Corporation use large number of assets and depending on the types of financial assets the fair value is required. However, if the market is not active for trading the asset, it will be difficult to determine the fair value for an asset. Especially, when market can be so erratic, the methods can be used to determine fair value. The fair value measures require applying market price and referring to prices of similar securities; if there is no alternative, the companies employ models to determine fair value (Nally, 2008). In addition, the recommendations for Janice is that they must identify or include all the assets in valuation, base their business valuation on realistic cash flow forecast and business risk assessment, and recasting historic financial reports for valuation (Valuadder, 2007). In unstable market, the fair value measurement provides guidance on estimating the fair value of an asset when the volume for the asset is decreased, assessing a debt security, and improving disclosures. Financial assets are subject of the accounting and vary in degrees. Fair value can be used ongoing basis, and the changes in fair value go through earnings but only for trading securities and derivatives. The company should report the changes in the fair value of available for sale securities in the
1) What role should ethics play in the writing of a proposal such as this? I believe ethics should pay a huge role in the writing of a proposal like this when the company prides itself on assisting minority business owners and considered as one of the best in the market. You must be fair across the board. Did the PEO do the ethical thing for David? Not at all! Although David should have compared prices and never signed anything without an attorney the PEO only did what was best for his salesperson. He lowered it to make himself feel like he at least tried to help fix the situation. How much money should the PEO have tried to make? At this point as little as possible because they did not do their job in the beginning to serve their client with the best services possible. What would you have done if you were part management at the PEO? I would first contract the salesperson and addressed the extra high estimate and why it was not reviewed once David purchased his printing company. I would have then have called David in to apologize for the mistake and redid his contract at the best deal possible. I’m a firm believer that mistakes can always be rectified it’s all in how it’s done.
The importance of the real estate can never be undermined for any economy. And as the real estate as a business grows, it becomes imperative for a state to regulate it. This is where the role of a real estate appraisal board comes to play. As in the case of Florida this function is performed by Florida Appraisal Board which looks into the administration as well and the enforcement of the real estate appraiser license law of the Florida Statutes. Its aim is to protect the public by regulating the appraisal and real estate licenses by educating the public and by facilitating compliance.
You have asked your opinion as to whether the plans to pay our outside auditors $500,000 of the next year for business consulting advice and $200,000 to prepare our tax returns presents an ethics issue.
If Owen knew about the decrease in value, he would accept the offer, but how will he find out if Luke doesn’t want to breach the information? In this case there is an issue between being honest to your company and being loyal to your brother. This case depicts an issue regarding Personal ethics, which are “principles that a person follows in order to uphold his/her morals,” (GENB4350 Online Lecture, Ethical Reasoning 1), because Luke might believe that it is right to tell his brother regardless if it is viewed as unethical. The reason this situation is an ethical issue is because Luke can betray the trust of his employers, while helping his brother make an easy decision, given the fact that he knows the value of his property will decline drastically in the near future.
In valuing the developable land at Canary Wharf, there are several factors to take into account. Namely, it is crucial to decide on an appropriate rate at which to discount the projected cash flows for the property. The developable properties of Canary Wharf come with considerable risk. For example, the London office market downturn, as well as significant market hits for the large financial services tenants of Canary Wharf, presents serious tenant lease up and lease covenant negotiation risks. How long will it take to attract quality tenants to the buildings, especially as financial services tenants are currently stressed? Additionally, the requirement for further planning consent on the buildings indicates that construction on three of the sites can not commence for a number of years. How can one accurately predict the market in the future? Will the London Office market significantly improve or continue to decline? What will interest rates look like? Songbird must consider the risk of valuing such sites several years into the future. Further, Songbird must consider the weighty transportation risk. If the Crossrail project does not come to fruition in a timely manner with necessary approvals, development will not proceed as planned, causing cost overruns and heavy construction delays. Assuming that Canary Wharf is able to get the necessary transportation approvals, Canary Wharf's projected cash flows should be discounted at 12.5% in order to mitigate risks to be faced. Given this discount rate, as well as considering all taxes, debt obligations, rents and rent-free periods, and all construction costs, an appropriate bid on the developable sites at Canary Wharf is ₤809,000 (the Net Present Value of the cash flows, discounted at 12.5%). Please see Exhibit 1 for a detailed pro forma of all projected cash flows.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2013). Business ethics: Ethical decision making and cases: 2011 custom edition (9th ed.). Mason, OH: South-Western Cengage Learning.
Normative ethical theory is the study of “What constitutes an acceptable ethical standard for business practice, and by what authority is the standard acceptable?” (Arnold, Beauchamp, Bowie, 2013, p. 17) Utilitarian, Kantian, and Virtue theories will be compared against Ms. Stewart’s actions in the ImClone
Sometimes banks and mortgage companies allow people with good credit to purchase property priced higher than its appraised value. For example, a single female with a good job and good credit was allowed to pay over forty thousand dollars more than the appraised value of the house she bought. Two years later she lost her job and immediately refinanced her mortgage loan for a lower interest rate and payment. A ye...
Corporate valuation is the process of examining several economic factors to determine the value of the business or an owner’s interest in a company. This process may also be conducted to provide a clear picture of the company’s financial status to be presented to current or potential investors. A significant concept in the context of corporate valuation is the fair market value. The fair market valuation is normally carried out in terms of cash. It could be explained as the price at which a certain business property would be traded.
I have recently been approached by Luke, an employee of ABC, for advice on how to approach a scenario related to Owen, Luke’s brother, who happens to live on the corner of the neighborhood near the developed land on which ABC plans to build an adult entertainment retail store. Luke knows that when the plans for the store are made public, the property value of the surrounding area would significantly decrease. Luke also knows that this would hurt Owen, who had recently received an offer for his house at an “okay” price, given the state of the current housing market. Luke feels conflicted between his obligations of confidentiality and loyalty towards the company and the loyalty and familial concern he has for his brother’s well-being and