Candice Klammer was reprimanded by the home office for recommending a pollution abatement project because the project did not meet the standard financial criterion of a 12 percent rate of return. However, Klammer had concluded that the $600,000 piece of equipment was necessary to prevent small amounts of arsenic from seeping into the city's water system. No EPA warnings have been issued to the company.
a. Discuss the company requirement of a 12 percent rate of return on all projects.
b. What might be the ultimate consequence to Klammer's employer if it fails to prevent future arsenic seepage into the water system?
c. How should Klammer justify the purchase of the equipment to the home office?