Howmet Aerospace Letter of Recommendations
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1
STRATEGIC RECOMMENDATIONS
Howmet Aerospace: Letter of Recommendations Kaleb Dull
12/11/2023
Limiting Market Volatility in Howmet Aerospace Howmet Aerospace is an aerospace company that focuses on commercial and defense aerospace, then also focusing on commercial transportation. They are known for their engine products, fastening systems, engineered structures, and forged wheels. Seeing all the different aspects of business that Howmet Aerospace is involved in we can almost assume that this company has some high-end cash flow but one thing that comes with the aerospace business is the demand from its customers. Doing some deep research into this company there has been many topics have been mined about this company and some amazing things that they do for the revolution of this planet but the one thing that has seemed to come up short is the high demand for the economy to be doing well for them to not come up short. When Covid 19 started to take over the population in 2020 this caused many companies struggled including Howmet, we can see the effects on this company through their
stocks, and the amount of revenue compared to other years before and after this pandemic. During this recommendation to Howmet Aerospace to narrow down the Market Volatility we will be integrating Howmet into creating, stress tests and threats, diversification, and cash reserve. https://www.aopa.org/
2
Standing Howmet Aerospace up to the
market of the Aerospace industry
This is a comparison of Howmet Aerospace's stock price versus the S&P Aerospace & Defense select industry index dividing this stock price by 71 because that is the number of companies combining this stock. In this comparison, we cannot only be able to see the price difference in the market of Howmet and its competitors, but we can also see a visual trend of the difference in the effects of outside factors on these companies in the Aerospace and defense industry. This also gives us a great demonstration of why diversity is so important when it comes to gaining value and always gaining revenue year to year. https://www.aopa.org/
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Minimizing Market volatility within Howmet
Aerospace
Market Volatility is something that we need to dive into and find a way to limit the volatility of Howmet Aerospace. One of the most ideal ways to limit Market Volatility for Howmet Aerospace is Cash Reserves, this is a method to take advantage of the economic downfall and to have usable cash to invest into different aspects of the company when things have when down in cost or value to get a long-term investment to make sure that they will make the money back that was lost in that time frame. Hold some cash to be able to invest in the companies that are doing well and working hard to be able to escape the economic downfall. For example, when COVID hit in 2019 and Pfizer was coming out with vaccines to stop covid from taking over, Howmet could have taken the cash that was held back for this instance and gave given millions of it to Pfizer for $33 a share this means they would have 303 thousand shares and then selling them at the beginning of 2022 when covid was over for 60$ a share, turning the initial 10 million into 18.2 million. https://www.aopa.org/
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Related Questions
Problem 2
A company that manufactures many types of plastic products, used packaging and
wrapping. If the company's cash flow (in thousand) for one of its product divisions is as
shown below. Determine (a) the number of possible I values and (b) all rate of return
values between 0% and 100%.
Year
0
1
2
3
4
5
6
NCF, $
-30
-2
-6
9
+21
+30
+18
+40
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Question 2
Part A and B
You are the CEO of Rahway Engineering and want to accelerate the expected sales growth (payments from customers)
for your new manufacturing control system.
Marketing has proposed expanding both the sales force and advertising to accomplish this.
Expected cash flows prepared by Rahway Engineering's Finance Department are as shown bellow.
Expected Operating Cash Flows
($s in 000s)
Expansion Case
Year
New Control Systems Sold
Price/System
Payments from Customers
Cash-Outflow
Salaries and Benefits
Advertising
Cars for Sales Force
Other
Total Cash-Outflow
Net Operating Cash Flow
No Expansion Case (Do Nothing)
($s in 000s)
Year
New Control Systems Sold
Price/System
Payments from Customers
Salaries and Benefits
Advertising
Cars for Sales Force
Other
Total Cash-Outflow
Net Operating Cash Flow
Rahway's CFO has determined a
Part A
45
$325
$14,625
$10,450
$2,675
$2,613
$500
$16,238
($1,613)
34
$325
$11,050
$4,703
$1,204
$705
$335
$6,947
$4,103
2
85
$325
$27,625
$18,275…
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Question 27 of 30
View Policies
Current Attempt in Progress
-/0.1 E:
Sandhill Bancorp has made an investment in banking software at a cost of $1,806,200. If management expects productivity gains and
cost savings to generate additional cash flows of $586,900, $657,600, $491,600, and $382,760 over the next four years, what is the
investment's payback period? (Round answer to 2 decimal places, e.g. 15.25.)
Payback period is
eTextbook and Media
Save for Later
Using multiple attempts will impact your score.
20% score reduction after attempt 2
years
Attempts: 0 of 3 used
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27
Which of the following should be included in the cash flow
projections for a new product?
I. Money already spent for research and development of
the new product
II. Capital expenditures for equipment to produce the new
product
II. Increase in working capital needed to finance sales of
the new product
V. Interest expense on the loan used to finance the new
product launch
Multiple Choice
II and III only
II and IV only
I, II, and III only
II, III, and IV only
I, II, III, and IV
None of the options are correct.
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Item 1 of 25
Which of the following statements is incorrect about working capital policy?
Select the correct response:
Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected.
Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the firm.
Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability.
O A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year.
The cash budget is useful in determining future financing needs.
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23 The Hanks Co is considering two projects. Project A consists of building a bee sanctuary on the firm's small parcel of land. Project B consists of building a retail store on on that same parcel. The parcel can accommodate only one of the projects. Which method of analysis is most appropriate for an analyst to employ?
A. Accounting rate of return
B. Profitability index
C. NPV
D. Payback
E. IRR
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Discussion Cash Flow
There is a common phrase in business: "Cash is king." "Cash flow is the life-blood of a company. Without it, a company will fail" (Hicks, 2012). Yet, companies often have to take risks that could potentially jeopardize their cash flow (e.g., new projects, growth, capital budgeting, etc.).
Assume you are the CFO of a struggling company. While you do have a positive cash flow, it is minimal at best. If something does not change soon, the company will go under. Fortunately, your product development team has just created a new product that will not only save the company from financial demise but will also revolutionize how the industry does business.
The problem is that the product is still 2 years away from being able to be sold to the public, and you will run out of cash within the next 6 months.
a. How would you propose obtaining the funds needed to keep the company alive and thriving for the next 2 years until you are able to see a return on the product…
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Finance
In Class Assignment 2 April 13, 2023 Case Study Cable & Moore With the company expanding into several new markets in the coming months, Cable & Moore was anticipating a large increase in sales revenue. The future looked bright for this provider of television, telephone, and Internet services. However, management of Cable & Moore was well aware of the importance of customer service in new markets. If customers had problems with new service and could not quickly and efficiently have their problems solved, demand would quickly erode, and it might take years to recover from the bad publicity. Therefore, management was adamant that there be enough well-trained customer service representatives to handle the calls from new customers and from potential customers. Based on experience in other markets, the anticipated number of phone calls to customer service was projected. Given the average call-length, the number of hours of customer-service time from April to August was…
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Question content area top
Part 1
Free cash flow valuation
Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the firm's common stock value. The firm's CFO has gathered data for performing the valuation using the free cash flow valuation model. The firm's weighted average cost of capital is 13%, and it has $3,010,000 of debt at market value and $600,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5 years,
1 through 5 are given in the table,
1 300,0002 340,0003 420,0004 480,0005 560,000
After year 5, the firm expects its free cash flow to grow by 6% annually.
a. Estimate the value of Nabor Industries' entire company by using the free cash flow valuation model.
b. Use your finding in part a, along with the data provided…
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HI5002 Finance for business
Question 1
You are a newly employed finance manager for Finance Adventure Ltd. The following data is available for the company as of 31 June 2020:
Current assets of $293,950
Current liabilities $68,700
Total assets $765,600
Equity $305,890
Required:
The company’s Management Board required you to evaluate two alternative options of debt funding and equity funding for a new project. What is the job are you doing to complete the task? (referring to one out of 3 important questions of corporate finance for your answer)
Calculate non-current assets, non-current liabilities and build a balance sheet for the company?
Calculate the return on assets (ROA) of the company given that return on equity (ROE) is 35%?
What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and…
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Question 10
Castle View Games would like to invest in a division to develop software for a soon-to-be-released video game console. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed the following estimates (in millions of dollars):
1.
Assuming that Castle View currently does not have any working capital invested in this division, calculate the cash flows associated with changes in working capital for the first five years of this investment. (Note: Enter decreases as negative numbers.)
The change in working capital for year 1 is
$nothing
million. (Round to the nearest integer.)
The change in working capital for year 2 is
$____________________
million. (Round to the nearest integer.)
The change in working capital for year 3 is
$__________________________
million. (Round to the nearest integer.)
The change in working capital for year 4 is
$nothing
million. (Round…
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Question 46
An analyst has recently been hired to improve the performance of SL Energy Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $160,000; Annual sales = $1,095,000; Accounts receivable = $180,000; Accounts payable = $36,000; Total annual purchases = $730,000. Calculate the firm’s inventory conversion cycle.
18 days
70 days
75 days
80 days
Question 47
Based on information from Question 46, Calculate the firm’s receivables collection period.
60 days
70 days
80 days
90 days
Question 48
Based on information from Question 46, Calculate the firm’s payables deferral period.
18 days
36 days
75 days
90 days
Question 49
Based on information from Question 46~48,…
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Question 12
A firm is considering Projects S and L, whose cash flows are shown below. These projects are
mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while
the CFO favors the NPV method. You were hired to advise the firm on the best procedure. If the
wrong decision criterion is used, how much potential value would the firm lose?
WACC: 8.50%
CFS
CFL
0
-$1,025 $380 $380 $380 $380
$141.55
-$2,150 $765 $765 $765 $765
$136.10
$146.99
1 2 3
$114.33
4
$115.69
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Please revise question 46 to get an answer in this options
An analyst has recently been hired to improve the performance of SL Energy Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $160,000; Annual sales = $1,095,000; Accounts receivable = $180,000; Accounts payable = $36,000; Total annual purchases = $730,000. Calculate the firm’s inventory conversion cycle.
18 days
70 days
75 days
80 days
Based on information from Question 46~48, Calculate the firm’s cash conversion cycle (CCC).
122 days
129 days
147 days
128 days
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Question
Alternative A: To buy Machine Audi which is similar to the existing machineAlternative B: Go in for Machine Benz which is more expensive and has much greater capacityThe cash flows at the present level of operations under the two alternatives are as follows:Year Machine Audi Machine Benz0 (30500) (32000)1 - 145002 9000 145003 19000. 145004 16000 145005 14000 14500The company estimates that its cost of capital is 11%. At the end of year 5, Machine Audi will have a scrap value of $2500 which is not included in the table above. Machine Benz will not have any residual value
(d) Calculate the Profitability Index for Machine Audi.
(e) Calculate the Internal Rate of Return for both machines (Use interpolation toarrive at your final answer.)
(f) Write a brief report to the management to determine whether Albert Trading should buy any machine.
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Problem 10.24Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 9 percent discount rate for their production systems,Year System 1 System 20 -$14,800 -$45,662 1 15,037 32,200 2 15,037 32,200 3 15,037 32,200
Compute the IRR for both production system 1 and production system 2. (Round answers to 2 decimal places, e.g. 15.25.)a). IRR of system 1 is __% and IRR of system 2 is ___%
b).Which has the higher IRR, System 1 or System 2?
c). Compute the NPV for both production system 1 and production system 2. (Round answers to 2 decimal places, e.g. 15.25 or 15.25%.)NPV of system 1 is $ ____ and NPV of system 2 is ____d). Which production system has the higher NPV? System 1 or System 2?
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Question 29 PART 1
The stand-alone principle allows us to analyze each project in isolation from the firm simply by focusing on incremental cash flows. Which of the following cash flows are not relevant for our analysis of a new project?
Group of answer choices
Financing costs
Opportunity costs
Taxes
Erosion or side effects
Net working capital
Question 29 PART 2
Will Smith once turned down the role to play Neo in “The Matrix.” The part went to Keanu Reeves. Will Smith instead chose to star as a cowboy in the blockbuster failure “The Wild Wild West.”
Kevin Costner also once turned down the role to play Andy Dufresne in “Shawshank Redemption.” The part went to Tim Robbins. Kevin Costner instead chose to star as the Mariner in the blockbuster failure “Waterworld.”
Based on the information above, what is one of the most relevant costs both Will Smith and Kevin Costner should consider when evaluating future movie projects?
Group of answer choices
Sunk…
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maining: 1:17:44
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ns
Which of the following is NOT one of the steps taken in the financial planning process?
O a. Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors.
O b. Projected ratios are calculated and analyzed.
O c. Assumptions are made about future levels of sales, costs, and interest rates for use in the forecast.
O d. Develop a set of projected financial statements.
O e. The entire financial plan is reexamined, assumptions are reviewed, and the management team considers how additional changes in operations might improve results.
Type here to search
O N
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Question 18 In a perfectly free economy, all buyers and sellers are what? A. utility users B. utility creators C. utility maximizers D. utility diminishers
Question 19 Which of the following is the term for a situation in which manufacturers sell to firms only if the firms charge a certain price for the goods? A. retail price maintenance agreements B. bid rigging C. exclusive dealing arrangements D. price discrimination
Question 20 An oil company is expanding, but no new oil fields are available. They therefore must resort to the expensive and less-efficient practice of extracting petroleum from oil sands. This is known as __________. A. the principle of increasing marginal cost B. the principle of gross marginal utility C. the principle of diminishing marginal utility D. the principle of increasing marginal utility
Question 21 The undesirable and unintended contamination of the environment because of the manufacture or use of commodities is commonly referred to as __________. A.…
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Related Questions
- Problem 2 A company that manufactures many types of plastic products, used packaging and wrapping. If the company's cash flow (in thousand) for one of its product divisions is as shown below. Determine (a) the number of possible I values and (b) all rate of return values between 0% and 100%. Year 0 1 2 3 4 5 6 NCF, $ -30 -2 -6 9 +21 +30 +18 +40arrow_forwardQuestion 2 Part A and B You are the CEO of Rahway Engineering and want to accelerate the expected sales growth (payments from customers) for your new manufacturing control system. Marketing has proposed expanding both the sales force and advertising to accomplish this. Expected cash flows prepared by Rahway Engineering's Finance Department are as shown bellow. Expected Operating Cash Flows ($s in 000s) Expansion Case Year New Control Systems Sold Price/System Payments from Customers Cash-Outflow Salaries and Benefits Advertising Cars for Sales Force Other Total Cash-Outflow Net Operating Cash Flow No Expansion Case (Do Nothing) ($s in 000s) Year New Control Systems Sold Price/System Payments from Customers Salaries and Benefits Advertising Cars for Sales Force Other Total Cash-Outflow Net Operating Cash Flow Rahway's CFO has determined a Part A 45 $325 $14,625 $10,450 $2,675 $2,613 $500 $16,238 ($1,613) 34 $325 $11,050 $4,703 $1,204 $705 $335 $6,947 $4,103 2 85 $325 $27,625 $18,275…arrow_forwardQuestion 27 of 30 View Policies Current Attempt in Progress -/0.1 E: Sandhill Bancorp has made an investment in banking software at a cost of $1,806,200. If management expects productivity gains and cost savings to generate additional cash flows of $586,900, $657,600, $491,600, and $382,760 over the next four years, what is the investment's payback period? (Round answer to 2 decimal places, e.g. 15.25.) Payback period is eTextbook and Media Save for Later Using multiple attempts will impact your score. 20% score reduction after attempt 2 years Attempts: 0 of 3 used Submit Answerarrow_forward
- 27 Which of the following should be included in the cash flow projections for a new product? I. Money already spent for research and development of the new product II. Capital expenditures for equipment to produce the new product II. Increase in working capital needed to finance sales of the new product V. Interest expense on the loan used to finance the new product launch Multiple Choice II and III only II and IV only I, II, and III only II, III, and IV only I, II, III, and IV None of the options are correct.arrow_forwardItem 1 of 25 Which of the following statements is incorrect about working capital policy? Select the correct response: Credit policy has an impact on working capital since it has the potential to influence sales levels and the speed with which cash is collected. Managing working capital levels is important to the financial staff since it influences financing decisions and overall profitability of the firm. Holding minimal levels of inventory can reduce inventory carrying costs and cannot lead to any adverse effects on profitability. O A company may hold a relatively large amount of cash if it anticipates uncertain sales levels in the coming year. The cash budget is useful in determining future financing needs.arrow_forward23 The Hanks Co is considering two projects. Project A consists of building a bee sanctuary on the firm's small parcel of land. Project B consists of building a retail store on on that same parcel. The parcel can accommodate only one of the projects. Which method of analysis is most appropriate for an analyst to employ? A. Accounting rate of return B. Profitability index C. NPV D. Payback E. IRRarrow_forward
- Discussion Cash Flow There is a common phrase in business: "Cash is king." "Cash flow is the life-blood of a company. Without it, a company will fail" (Hicks, 2012). Yet, companies often have to take risks that could potentially jeopardize their cash flow (e.g., new projects, growth, capital budgeting, etc.). Assume you are the CFO of a struggling company. While you do have a positive cash flow, it is minimal at best. If something does not change soon, the company will go under. Fortunately, your product development team has just created a new product that will not only save the company from financial demise but will also revolutionize how the industry does business. The problem is that the product is still 2 years away from being able to be sold to the public, and you will run out of cash within the next 6 months. a. How would you propose obtaining the funds needed to keep the company alive and thriving for the next 2 years until you are able to see a return on the product…arrow_forwardFinance In Class Assignment 2 April 13, 2023 Case Study Cable & Moore With the company expanding into several new markets in the coming months, Cable & Moore was anticipating a large increase in sales revenue. The future looked bright for this provider of television, telephone, and Internet services. However, management of Cable & Moore was well aware of the importance of customer service in new markets. If customers had problems with new service and could not quickly and efficiently have their problems solved, demand would quickly erode, and it might take years to recover from the bad publicity. Therefore, management was adamant that there be enough well-trained customer service representatives to handle the calls from new customers and from potential customers. Based on experience in other markets, the anticipated number of phone calls to customer service was projected. Given the average call-length, the number of hours of customer-service time from April to August was…arrow_forwardQuestion content area top Part 1 Free cash flow valuation Nabor Industries is considering going public but is unsure of a fair offering price for the company. Before hiring an investment banker to assist in making the public offering, managers at Nabor have decided to make their own estimate of the firm's common stock value. The firm's CFO has gathered data for performing the valuation using the free cash flow valuation model. The firm's weighted average cost of capital is 13%, and it has $3,010,000 of debt at market value and $600,000 of preferred stock in terms of market value. The estimated free cash flows over the next 5 years, 1 through 5 are given in the table, 1 300,0002 340,0003 420,0004 480,0005 560,000 After year 5, the firm expects its free cash flow to grow by 6% annually. a. Estimate the value of Nabor Industries' entire company by using the free cash flow valuation model. b. Use your finding in part a, along with the data provided…arrow_forward
- HI5002 Finance for business Question 1 You are a newly employed finance manager for Finance Adventure Ltd. The following data is available for the company as of 31 June 2020: Current assets of $293,950 Current liabilities $68,700 Total assets $765,600 Equity $305,890 Required: The company’s Management Board required you to evaluate two alternative options of debt funding and equity funding for a new project. What is the job are you doing to complete the task? (referring to one out of 3 important questions of corporate finance for your answer) Calculate non-current assets, non-current liabilities and build a balance sheet for the company? Calculate the return on assets (ROA) of the company given that return on equity (ROE) is 35%? What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and…arrow_forwardQuestion 10 Castle View Games would like to invest in a division to develop software for a soon-to-be-released video game console. To evaluate this decision, the firm first attempts to project the working capital needs for this operation. Its chief financial officer has developed the following estimates (in millions of dollars): 1. Assuming that Castle View currently does not have any working capital invested in this division, calculate the cash flows associated with changes in working capital for the first five years of this investment. (Note: Enter decreases as negative numbers.) The change in working capital for year 1 is $nothing million. (Round to the nearest integer.) The change in working capital for year 2 is $____________________ million. (Round to the nearest integer.) The change in working capital for year 3 is $__________________________ million. (Round to the nearest integer.) The change in working capital for year 4 is $nothing million. (Round…arrow_forwardQuestion 46 An analyst has recently been hired to improve the performance of SL Energy Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, the analyst wants to determine the firm’s cash conversion cycle. Using the following information and a 365-day year: Current inventory = $160,000; Annual sales = $1,095,000; Accounts receivable = $180,000; Accounts payable = $36,000; Total annual purchases = $730,000. Calculate the firm’s inventory conversion cycle. 18 days 70 days 75 days 80 days Question 47 Based on information from Question 46, Calculate the firm’s receivables collection period. 60 days 70 days 80 days 90 days Question 48 Based on information from Question 46, Calculate the firm’s payables deferral period. 18 days 36 days 75 days 90 days Question 49 Based on information from Question 46~48,…arrow_forward
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- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
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ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning