Financial Management B-103 Free Sample

Paper-III IIBM Institute of Business Management Financial Management Subject Code –B-103 Section A: Objective Type PART ONE Multiple choices Question With Single Response: Q. 1 The approach focused mainly on the financial problems of corporate enterprise. a. Ignored non-corporate enterprise b. Ignored working capital financing c. External approach d. ignored routine problems Ans. Q 2 These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated period. a . Cumulative preference shares b. Non-cumulative preference shares c.

Redeemable preference shares d. Perpetual shares Ans. Q 3. This type of risk arise from changes in environmental regulations, zoning requirement, fees, licenses and most frequently taxes. a. Political risk b. Domestic risk c. International risk d. industry risk Ans. Q 4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment proposal. a. Future cost b. Specific cost c. Spot cost d. Book cost Ans. Q 5. The concept is helpful in formulating a sound & economical capital structure for a firm. a. Financial performance appraisal b. Investment evaluation . Designing optimal corporate capital structure d. None of the above Ans. Q 6. It is the minimum required rate of return needed to justify the use of capital. a. From investors b. Firms point c. Capital expenditure point d. Cost of capital Q. 7 . It arises when there is a conflict of interest among owners, debenture holders and the management. a. Seasonal variation b. Degree of competition c. Industry life cycle d. Agency costs Q 8. Some guidelines on shares & debentures issued by the government that are very important for the constitution of the capital structure are: a.

Legal requirement b. Purpose of finance c. Period of finance d. Requirement of investors Q. 9 It is that portion of an investments total risk results from change in the financial integrity of the investment. a. Bull- bear market risk default b. Default risk c. International risk d. Liquidity risk Q. 10 ………………….. measure the systematic risk of a security that cannot be avoided through diversification. a. Beta b. Gamma c. Probability distribution d. Alpha PART TWO Short Note Type Question: Q. 1 What is Annuity kind of cash flow? Q 2. What do understand by portfolio risk?

Q 3. What do you understand by loan Amortization? Q 4. What is the Difference between NPV and IRR? END OF SECTION A | Section B: Caselets ( 40 Marks ) CASELET-1. Q. 1. What type of financing is appropriate to each firm? Q. 2. What type of securities must be issued by a firm which is on the growing stage in order to meet the financial requirement? CASELET-2. Q. 1. How would you judge the potential of Bajaj Electronics on the first year of sale to Booth Plastic and give your views to increase the profit? Q. 2. Suggestion regarding credit limit.

Should it be approved or not, what should be the amount of credit limit that electronics give to Booth Plastics. END OF SECTION B | Section C: Applied Theory Q. 1. Honey Well Company is contemplating to liberalize its collection effort. Its present sale are Rs. 10 lakh, its average collection period is 30 days, its expected variable cost to sale ratio is 85 per cent and is bed debt ratio is 5 per cent. The Company‘s cost of capital is 10 per cent and tax are is 40 per cent. He proposed liberalization in collection effort increase sale or Rs. 2 lakh increase average collection period by 15 days, and increases the bad debt ratio to 7 percent. Determine the change in net profit. Q. 2. Explain the concept of working capital. What are the factors which influence which influence the working capital? END OF SECTION C | >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Precis And Evaluation In “For The Children Of The Infidels”

According to Bobby Wright, American Indian Education in the Colonial Colleges disproves the modern depiction and praise of colonial colleges’ efforts to educate and convert Native Americans. Wright contends that the colleges deceitfully used education and conversion as a means to further their own achievements.

Wright supported his claim by mentioning several institutions such as the Virginia Company, Harvard, William and Mary, and Dartmouth. According to him, these institutions used the excuse of Indian missions to acquire financial support from England. The Virginia Company was established in 1609 by King James I with the purpose of converting Native Americans to Christianity. The colonists understood that education was necessary in order to achieve this goal. In 1617, King James I obtained the necessary funds for this mission, and by then the colonists had chosen a piece of land where they would build an Indian College.

However, Wright claims that after the Virginia Company received funding for the college, the treasurer decided to prioritize his economic plan over using the money for the benefit of the Indians (Wright, 1988, p 72-74). According to Wright, within just three years, three-fourths of the money allocated for the college had vanished without any being used for Christianizing the Indians. Wright also cites Harvard as another example to support his argument. He explains that in 1636, Harvard was established, and by 1643, the college was seeking contributions from England specifically for supporting work with the Indians.

However, Parliament denied funding, and only agreed to support schools that aimed to teach Christianity to the native population. In 1650, the president of Harvard amended the college’s charter to include educating both English and Indian youth. This move was made in order to please Parliament and secure funds for building an Indian college. Yet, contrary to its original intention to serve Indian students, the Indian college eventually started admitting English students.

The Indian college in fact only had four Indian students during the four decades it was open (Wright, 1988, p. 74-75). Additionally, Wright uses the College of William and Mary as another example of how colonial colleges made deliberate efforts to educate Native Americans. In 1691, James Blair was in London seeking a royal charter for William and Mary. Around the same time, a wealthy governor of the New England Company passed away, leaving his estate for unspecified charitable causes. Wright explains that Blair took advantage of this situation by acquiring the estate for his proposed college, claiming that he would use it to spread Christianity among Native Americans.

During Blair’s fifty-year presidency, William and Mary neglected to actively educate and spread Christianity to Indians, as evidenced by the college’s limited effort to educate only a few Indians during that time. Instead, the estate’s resources were dedicated to campus building and the education of English students (Wright, 1988, p. 75-76). Another example Wright provides to support his argument is Dartmouth College.

The founder of Dartmouth College, Eleazar Wheelock, sent an Indian to England and Scotland to raise funds for educating and converting Indians. The funds were then used to construct Dartmouth College. Yet, despite its initial purpose, Dartmouth soon became predominantly attended by English students. As the number of English students grew, the enrollment of Indian students declined. In the 1770s, only forty Indian students were educated at Dartmouth. (Wright, 1988, p. 76-78).

Overall, contemporary literature and historians commend colonial colleges for their endeavors in educating and Christianizing Indians. Nevertheless, Bobby Wright presents a contrasting viewpoint, suggesting that these efforts were actually self-serving for the colleges. Wright supports his argument by examining the actions of the Virginia Company and various colonial colleges such as Harvard, William and Mary, and Dartmouth. In conclusion, Wright’s article successfully challenges the prevailing notion that colonial colleges should be lauded for their attempts to educate Indians and propagate Christianity.

Wright initiated the argument by addressing the conflicting interests among the English, colonists, and Indians. The British aimed to “Europeanize” the Indians through the colonists, while the colonists lacked genuine motivation to educate and convert the Indians but relied on England’s financial support. Conversely, the Indians resisted giving up their culture. These conflicting interests serve as the foundation for Wright’s subsequent depiction of contrived attempts by colonial colleges to educate and propagate Christianity among the Indians. These examples enable readers to anticipate and comprehend the evidence Wright presents in support of his thesis.

Wright’s examples, constructed chronologically, include the Virginia Company (1609), Harvard (1636), College of William and Mary (1693), and Dartmouth College (1769). In each instance, Wright presents sufficient evidence to support his argument. The strongest support for the misuse of funds intended for Indian philanthropy is provided by Wright’s closing example of Dartmouth College. Overall, the article is well-written and provides detailed descriptions of each account from the Colonial period.

Wright’s impactful descriptions effectively persuade the reader. Bobby Wright’s article offers valuable insights into the relationship between England, colonial colleges, and the Indians. The information provided by Wright proves advantageous to present-day students, teachers, and historians.

Essay Paper – Foxconn Case

Introduction to Paper

During 2010, Foxconn, the world’s largest contract manufacturer, came under heavy scrutiny for a string of suicides at its Shenzhen facility. Although the causes behind these suicides were multifaceted and encompassed societal, managerial, and operational issues, our examination indicates that enhancing communication tactics could be advantageous for the company. This document provides an overview of the company, discusses the suicides and ensuing media coverage, evaluates the communication issue, proposes a solution, and presents suggested implementation measures.

Company Background

In 1974, Gou Taiming established Hon Hai Precision Industry Company Ltd, which now serves as the primary company of Foxconn Technology Group. The objective of Gou Taiming was to offer economically viable electronic solutions to enhance worldwide accessibility to electronic products. Foxconn is the leading contract manufacturer for electronic components and produces for renowned companies like Apple, Dell, HP, among others.

Foxconn is a popular choice for companies seeking cost-effective manufacturing outsourcing, as it prioritizes high quality standards and confidentiality. The company is headquartered in Taiwan and operates its largest manufacturing plant in Longhua, Shenzhen, mainland China. Established in 1988, this location currently employs approximately 420,000 people. Referred to as Foxconn City, the Shenzhen site includes a walled campus with factories, dormitories, a downtown complex, restaurants, and other amenities. While some employees live off-campus, most reside in the provided dormitories.

The workers frequently reside in dormitories with eight to ten occupants per room. Foxconn has faced extensive media attention for a period of time because of employee suicides that occurred in their factories. This has led to criticism of Foxconn for inadequate working conditions, extremely low pay, and excessively long hours. Reported wages vary from $132 to $300 per month, and working hours frequently exceed 12 hours per day.

The Problem

Foxconn’s Shenzhen location experienced a series of suicides in 2009 and 2010, which led to intense scrutiny.

In 2010, media attention and investigations were prompted by the occurrence of 12 worker suicides. Non-profit organizations such as Students and Scholars Against Corporate Misbehavior (SACOM), based in Hong Kong, took interest in these incidents. The first suicide was that of Sun Danyung, a 25-year-old worker who jumped from his 12th floor apartment in 2009 after losing an iPhone prototype. Foxconn made two statements to the media following this tragic event. In one statement, they mentioned allegations of their security chief’s involvement in searching for and assaulting Mr.

The investigation into the missing iPhone prototype and Mr. Danyung’s suicide has been handed over to the police. Foxconn executive Li Jinming acknowledged that Sun’s death highlighted the need for improved support for employees facing psychological pressures. Sun Danyong, a talented individual who joined the company in 2008, tragically lost his life. This devastating event was followed by 12 more suicides at the Shenzhen plant, with Foxconn initially failing to provide statements to the media about the first five deaths of 2010. However, the company responded after the sixth death by acknowledging shortcomings in their management system in an interview with YanCheng Post. Liu Kun, Foxconn’s Director of Media, shared that managing such a large workforce is challenging but not an excuse. When the seventh death occurred, Liu Kun spoke to CCTV, China’s official media channel, expressing satisfaction with the efforts made and pre-assessments and interventions carried out. Despite further measures taken after the eighth death, Foxconn did not address these actions in the media.In order to address the issue of suicides among its employees, Foxconn made the decision to provide round-the-clock counseling services at the plant. Additionally, the company revealed its intentions to recruit 2000 psychologists.

Foxconn made the decision to employ Buddhist monks from Wutai Mountain to perform religious ceremonies and provide solace to workers at its Shenzhen plants. Additionally, they introduced a stress-relief center equipped with music where workers could release their frustration by punching a bag that featured an image of their supervisor. When the ninth death occurred, Foxconn did not issue a public response. However, when the tenth death took place, CEO Gou Taiming publicly refuted claims that his company was a sweatshop while in Taiwan. At this stage, demonstrators were gathering outside the Foxconn facilities.

Reports indicate that on May 24, 2010, Gou addressed the public’s lack of understanding regarding the series of suicides at Foxconn. He stated that certain information pertaining to the issue is currently undisclosed as they strive to manage it. Gou acknowledged the challenge of overseeing a workforce exceeding 800,000 employees but expressed confidence in resolving the situation. Additionally, he asserted that had there been any issues with working conditions, they would have been identified earlier.

Following the 11th death at Foxconn, Gou Taiming held a press conference where he bowed three times to show his respect. He called for more positive media coverage and stressed the need to prevent further fatalities. While acknowledging that similar incidents might still occur, Gou assured that the company was striving to improve employee welfare. However, within just 12 hours of his statement, another death occurred – the 12th one – drawing scrutiny towards Foxconn’s labor practices and prompting reactions from both the government and clients.

Governor Wang Yang of Guangdong province in China has called for improved working conditions and collaboration between the government and the company to prevent similar incidents from happening again. Governor Wang suggests increasing sports and leisure activities for workers and enhancing communication between employees and employers. On May 26, 2010, the Shenzhen government held a press conference expressing their shock and sympathy regarding the issue. In response, they formed a task force consisting of three deputy mayors to conduct an investigation.

After the suicides at Foxconn, a number of technology companies such as Sony, Apple, Dell, Nokia, and Hewlett Packard have shown their worries and responded. Sony mentioned that they have taken steps to evaluate the working conditions at Foxconn. Steven P. Jobs, CEO of Apple, also expressed his concern about the suicides.

Analysis of the Communication Problem

The analysis of the case reveals that Foxconn’s failure in effective communication can be attributed to four key issues: •They neglected to acknowledge the operational management problem promptly. oTheir response was delayed. •They reacted instead of being proactive in addressing the issue publicly. They never communicated their action plan through media channels to resolve the problem. •Lastly, they failed to engage in direct dialogue with their employees or their families in a public setting. Initially, Foxconn attempted to downplay the incident and denied having any issues within the company. Looking at the timeline of the Foxconn suicide cases, it is evident that the company did not recognize the internal problem that led to employee suicides. Consequently, when faced with the first suicide case in 2009, Foxconn responded by stating that they needed to work harder in supporting employees dealing with psychological pressures.

In 2010, Foxconn failed to publicly address the first six deaths that occurred over a two month period. However, after the eighth suicide, Foxconn took action by establishing a psychological service center, hiring counselors, providing help lines, and bringing in Buddhist monks. It was not until the tenth suicide that the CEO of the company, Mr. Gou, spoke publicly about the incidents in Taiwan. In an interview with Bloomberg Business-week, Gou admitted that he initially did not recognize the gravity of the suicides, but now feels guilty. Foxconn was consistently seen as reactive rather than proactive in the media, and should have recognized the underlying problem causing the suicides within the company.

Despite Foxconn commenting on the initial suicide in 2009 during a media interview, the company remained silent about the six subsequent suicides that took place within a two month timeframe in 2010. It was only after the media intervened and public outcry ensued that Foxconn finally issued an official statement to the press. Foxconn should have taken proactive measures to address the underlying issues leading to these suicides and effectively communicated this information to both the media and their employees.

Foxconn attempted to address the ongoing issue of suicides amongst its employees by implementing preventive measures such as establishing a suicide hotline and installing nets around the buildings. However, these actions were communicated to the media too late, damaging the company’s reputation. Foxconn failed to disclose a detailed plan for improving employee conditions in the media, with their CEO lacking in providing concrete examples or effective responses. Not only did the CEO display ignorance regarding the company’s unethical practices, but he also made controversial statements that garnered media attention. Instead of addressing the suicides promptly, the CEO remained silent until after the 10th suicide had occurred, and his initial response was dismissive. Furthermore, he made statements minimizing the magnitude of managing a workforce of over 80 million employees at Foxconn. On the 11th suicide, the CEO made an attempt at appeasement by bowing three times, but his focus was on urging media coverage of positive aspects of Foxconn rather than addressing the suicides themselves.During the press conference, the CEO acknowledged that while he couldn’t guarantee the prevention of future deaths, efforts were being made to improve the welfare of their employees. However, just twelve hours later, another tragic suicide occurred at Foxconn.

Foxconn’s failure to communicate openly with its employees or their families was crucial in the unfortunate events that took place. Regrettably, there is no evidence of an official apology from the company or its CEO to the affected employees and victims’ families. In Chinese culture, admitting one’s mistakes and seeking forgiveness holds great significance. Hence, it was necessary for the Foxconn CEO to apologize to the victims’ families and recognize the company’s partial responsibility for these tragic suicides.

Furthermore, Mr. Guo should have convened a meeting with the employees, where he would acknowledge the existence of a problem within the company and give them reassurance that efforts are being made to address the issues.

Solution

The implementation of the Foxconn Conference Design should include Guo Taiming delivering a press conference to demonstrate the company’s sincere apologies for the situation and their commitment to improving the conditions. It is important for Foxconn to proactively communicate with the public about the incidents at their Shenzhan campus and outline their strategies to prevent any further fatalities.

Despite the 11th death occurring, it was still important for Foxconn to address the public in a conference. To ensure effectiveness, our suggestion is to implement the conference in the following manner:

1. Guo Taiming, the president representing the board members, should attend the conference and make a statement to the public. This will demonstrate his full responsibility for the company’s actions from both the employees’ and public’s perspective. His involvement will showcase the company’s commitment to change.

2.

The conference should invite national and local media, such as TV, Newspaper, and Website. The following media outlets are particularly important: CCTV, Shenzhen TV, Guangdong TV, Guangdong Daily, Shenzhen Daily, Gongren Daily, Investment Times, Sina.com, and Sohu.com. Additionally, 8-10 front-line employees should be invited to attend. To convey the message that Foxconn wants to work with the employees to solve the problem, it is suggested that the employees sit around Guo instead of sitting opposite to Guo.

The employees’ trust in Foxconn will also be perceived positively by the public. To demonstrate his sincerest condolences and empathy towards the families who have lost their loved ones, Guo Taiming should perform three bows as per the solemn Chinese protocol that expresses “sorrow” and “regret” to someone. Without this meaningful gesture, it would be difficult for him to truly convince the audience of his remorse. Additionally, each department involved in the reform project should provide a concise outline of their respective plans to enhance employee satisfaction.

Foxconn must provide a detailed plan and timeline for the actions they will take, unlike their previous vague statements. In this official conference, they need to add a question and answer session to directly communicate with the media and employee representatives. It is concerning that Foxconn has never initiated a direct dialogue with its employees or the public, even after the 11th death, which raises doubts about their treatment of employees. Therefore, in the conference, Foxconn should be honest to demonstrate that the factory is not a sweatshop.

The company should refrain from arguing with questioners and instead present facts through pictures and videos, while emphasizing their reform plan. Additionally, it is recommended that the conference be limited to one hour. If it is too short, it may hinder Foxconn’s ability to demonstrate sincerity, and if it runs too long, it could result in an overwhelming number of difficult questions and become a blame session. Ideally, the conference should be divided into two sessions, with the first 45 minutes allocated for Guo and the departments to speak, and the last 15 minutes reserved for Q&A. This is the official statement from Guo Taiming at Foxconn, where they apologize to employees and their families.

The president of Foxconn, Guo Taiming, has highlighted the importance of enhancing employee satisfaction and encouraged young workers to appreciate their lives. He expressed profound sorrow regarding the loss of certain employees and admitted that Foxconn had not lived up to their expectations. Guo Taiming sincerely apologized for this shortcoming and offered condolences to the families, friends, and colleagues impacted by these unfortunate incidents.

I acknowledge that Foxconn is not flawless in any manner. We have the same weaknesses as any assembly line factory does. The sheer number of employees at our Shenzhen campus, exceeding 420,000, poses even greater challenges in managing the world’s largest factory. It would have been better if we had collaborated with our employees, who take pride in being part of Foxconn, to address the problems we are currently facing. Regrettably, we only realized this lesson after those young individuals made the tragic decision to end their own lives. The board committee has resolved to prioritize enhancing employee satisfaction.

We will implement multiple measures to improve the overall well-being of our employees. Firstly, their basic salary will be increased by 30% starting from today. Additionally, the recruitment of more employees will help reduce the overtime hours in order to meet the country’s standards. Furthermore, we are planning to hire permanent psychological consultants whose main objective will be to alleviate employees’ stress levels. Moreover, a new social department will be established, responsible for organizing various social events to enhance the lives of our employees on campus. Lastly, our communication channels will be enhanced to ensure effective communication with each employee. Furthermore, all board members will take turns participating in the “Talk to employees” day, where they will actively listen to the opinions and concerns voiced by the employees.

We are confident that we can improve Foxconn for all our employees because they are the most valuable assets. Let me address my employees: You are all very young and have bright futures ahead for yourselves, your families, and the people you love. You joined Foxconn to find hope, not to bring grief to your parents. You are entering society and about to make something of your lives; you are the hope for those who care about you. Do not give up on life! As long as you are alive, there is still a chance to bring about change. Nothing is more important than your life – not money, not status, not reputation. Your life, your only life, is more precious than anything worth fighting for. As a parent myself, I understand the immense sorrow that comes with losing a beloved child. I promise you and your families that I am working on creating a better system for all of you. I want to hear from you and I want your help in making our factory a better place for everyone. If you ever feel stressed, unhappy, or lacking motivation, do not hesitate to come directly to me.

My door is always open to you! Life is a wonderful journey, and you have just started this journey with a long road ahead. Cherish and appreciate your life.

Appendix

Timeline of Suicides in 2010

First suicide: Jan. 23rd, 2010 Ma Xiangqian, Male, 19-year-old

Second suicide: Mar. 11th, 2010 Li, Male, 20-year-old

Third suicide: Mar. 29th, 2010 Male, 23-year-old

Fourth suicide: Apr. th, 2010 Rao, Female, 18-year-old, failed suicide attempt

Fifth suicide: Apr. 7th, 2010 Ning, Female, 18-year-old

Sixth suicide: Apr. 7th, 2010 Sun, Male, 22-year-old

Seventh suicide: May 6th, 2010 Lu Xiang, Male, 24-year-old

Eighth suicide: May 11th, 2010, Female, 19-year-old

Ninth suicide: May 14th, 2010, Male, 21-year-old

Tenth suicide: May 21st, 2010, Male, 22-year-old

Eleventh suicide: May 25th, 2010, Male

Twelfth suicide: May 26th, 2010, Male

On May 27th, 2010, a male attempted suicide but was unsuccessful. This was the thirteenth suicide. Another male, aged 23, attempted suicide on November 5th, 2010. This was the fourteenth suicide.

Bibliography

Johnson, J. (2011, February 28). 1 Million Workers. 90 Million iPhones. 17 Suicides. Who’s to Blame? Wired Magazine.

Demick, B., Sarno, D. (2010, May 26). Firm shaken by suicides. Los Angeles Times.

Suicides at Foxconn: Light and Death (2010, May 27). The Economist.

Barboza, D. (2010, July 19). A Night at the Electronics Factory. The New York Times.

Foxconn worker plunges to death at China plant: report. (2010, November 5). Reuters.

Moore, M. (2010, May 16). What has triggered the suicide cluster at Foxconn? The Telegraph.

Dalrymple, J. (2009, July 21). Apple confirms death of iPhone worker in China. Net.

Barboza, D. (2009, July 26). iPhone Maker in China Is Under Fire After a Suicide. The New York Times.

Lai, R. (2010, May 19). The fate of a generation of workers: Foxconn undercover fully translated. Engadget.

Source:

– Johnson, J. (2011, February 28). 1 Million Workers.90 Million iPhones.17 Suicides.Who’s to Blame? Wired Magazine.http://www.wired.com/magazine/2011/02/ff_joelinchina/all/1

– Demick, B., Sarno, D. (2010, May 26). Firm shaken by suicides. Los Angeles Times.http://articles.latimes.com/2010/may/26/world/la-fg-china-suicides-20100526

– Suicides at Foxconn: Light and Death (2010, May 27). The Economist.http://www.economist.com/node/16231588?story_id=16231588

– Barboza, D. (2010, July 19). A Night at the Electronics Factory. The New York Times.http://www.nytimes.com/2010/06/20/weekinreview/20barboza.html

– Foxconn worker plunges to death at China plant: report. (2010, November 5). Reuters.http://www.reuters.com/article/2010/11/05/us-china-foxconn-death-idUSTRE6A41M920101105

– Moore, M. (2010, May 16). What has triggered the suicide cluster at Foxconn? The Telegraph.http://blogs.telegraph.co.uk/news/malcolmmoore/100039883/what-has-triggered-the-suicide-cluster-at-foxconn/

– Dalrymple, J. (2009, July 21). Apple confirms death of iPhone worker in China. Net.http://news.cnet.com/8301-13579_3-10291701-37.html

– Barboza, D. (2009, July 26). iPhone Maker in China Is Under Fire After a Suicide. The New York Times.http://www.nytimes.com/2009/07/27/technology/companies/27apple.html?pagewanted=1&_r=2&sq=foxconn&st=cse&scp=1

– Lai, R. (2010, May 19). The fate of a generation of workers: Foxconn undercover fully translated. Engadget.http://www.engadget.Foxconn, the China-based plant, announced that it will raise wages once again. This declaration was made after a series of suicides occurred at the company, leading Apple to send their COO, Tim Cook, to China. Unfortunately, another worker committed suicide at Foxconn in Shenzhen, China. As a response to these incidents, Foxconn increased their wages.

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