A firm has a current market value of $3,000,000. If the firm proposes to issue $1,000,000 in debt and use the proceeds to repurchase some of the firm's shares, what will the value of the firm be after the debt issuance/share repurchase? Assume that the borrowing rate is 8% and the marginal corporate tax rate is 39%. Also assume that the debt will be issued without a maturity date (perpetual debt). Round your answer to the nearest .01 and do not include a dollar sign in your answer.

Answers

Answer 1

The value of the firm after the debt issuance/share repurchase can be calculated using the Modigliani-Miller theorem, which states that under certain assumptions, the capital structure of a firm does not affect its overall value.

In this case, the firm is issuing $1,000,000 in debt and using the proceeds to repurchase some of its shares. The debt issuance increases the firm's value by $1,000,000 (the amount of debt issued). However, the repurchase of shares reduces the firm's value.

To calculate the change in firm value, we need to consider the interest expense on the debt and the tax shield provided by the interest expense. The interest expense on the perpetual debt will be $1,000,000 * 8% = $80,000 per year.

The tax shield is the amount of interest expense multiplied by the corporate tax rate. In this case, the tax shield will be $80,000 * 39% = $31,200 per year.

The net effect of the debt issuance and share repurchase on the firm's value is the difference between the increase in value due to the debt issuance and the decrease in value due to the share repurchase.

Therefore, the value of the firm after the debt issuance/share repurchase will be $3,000,000 + $1,000,000 - $31,200 = $3,968,800.

So, the value of the firm after the debt issuance/share repurchase will be $3,968,800.

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Related Questions

50 POINTS

If (it) management does not "buy-in" to the plan, what might happen?


a. reduce confidence

b. nothing will change

c. increase confidence

d. management will be fired

Answers

Nothing will change. Upper management must enthusiastically pursue the plan and create a culture for employees to follow

Answer:

reduce confidence

Explanation:

i got it right on odyssey

Terri owns a computer repair shop. Her revenue at the end of last month was $7,450. What is terri's run rate?.

Answers

Based on the information given, Terri's Run Rate is $96,000. Run frequency utilizing this formula The run rate is the revenue for the Period divided by the number of months.

Which of the following phrases most accurately sums up information?

News is information about a criminal act that is communicated or obtained regarding a specific incident or circumstance. He has amassed a staggering quantity of general knowledge through study, conversation, research, education, and other activities.

Data is processed information. Information is a grouping of facts that has been purposefully processed to meet the required objective. Information may be arranged, displayed, or processed in a certain way to make it applicable and useful.

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the types of milatary are safe

Answers

Answer: US Air Force and Navy

Explanation:

The full cost of attendance to an institute of higher education, including tuition, room and board, books and other costs is known as _____.

Answers

A cost of attendance encompasses the full cost of attendance to an institute of higher education, including tuition, room and board, books etc

What is a cost of attendance?

This means the college's total estimated expenses for a year which includes tuition, room and board, books, supplies, transportation, loan fees, miscellaneous expenses etc.

These cost is used also used to determine each student's eligibility for financial aid such as grants and loans.

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economists typically express the elasticity coefficient as an absolute value in order to ______.

Answers

Economists typically express the elasticity coefficient as an absolute value in order to avoid ambiguity.

The elasticity coefficient tells us how the quantity of a product responds to the changes in prices that occur in the market.

The absolute value is taken in order to avoid ambiguity by eliminating negative values given that quantity and prices cannot be negative.

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Isa bought goods on credit from Ammar. The goods had a list price of $1000 but Ammar allowed Isa trade discount of 10% and cash discount of 4%.
How much did Isa have to pay Ammar?

Answers

Answer:

$600 correct me if im wrong

a high tariff on imported good x might reduce domestic employment in industry y if:

Answers

High tariff on imported good X might reduce domestic employment in industry Y if industry Y relies on imported good X as an input for its production process.

If the tariff makes imported good X more expensive, industry Y will face higher production costs, which could result in reduced output and potentially lead to job losses. Additionally, if industry Y is in direct competition with foreign producers who have a cost advantage due to lower input costs, the higher tariff on imported good X may make domestic producers less competitive, leading to a decline in demand for their goods and further job losses.

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If manufacturing overhead has been underallocated during the​ period, and most of the jobs produced have been​ sold, then:_________

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If manufacturing overhead has been underallocated during the period, and most of the jobs created have been sold, then "the cost of goods sold reported on the income statement will be lower than the actual cost".

This is because the underallocated overhead will not have been fully absorbed into the cost of the products, leading to an understated cost of goods sold and an overstated gross profit. As a result, the company's financial performance will appear better than it actually is. This could have negative consequences for the company, such as reducing its ability to secure financing or make investment decisions based on inaccurate financial information.

To correct the situation, the company would need to allocate the underallocated overhead to the appropriate products, which would result in a restatement of the cost of goods sold and a corresponding adjustment to the gross profit.

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The Edwards’s Theater chain has studied its movie customers to determine how much money they spend on concessions. The study revealed that the spending distribution is approximately normally distributed with a mean of $4. 11 and a standard deviation of $1. 37. What percentage of customers will spend less than $3. 00 on concessions? Answers should have 2 decimal places

Answers

The percentage of customers that will spend less than $3.00 on concessions will be 20.90%.

The problem is solved using the concept of z-score and the standard deviation. The formula for finding the z-score is represented as

z = (x - μ) / σ

where x is the value we want to standardize, μ is the mean, and σ is the standard deviation.

According to the question, the value of x = $3.00, μ = $4.11 and σ = $1.37

Substituting these value we get

z = (3.00 - 4.11) / 1.37

z = -0.81

From the standard normal distribution table the value corresponding to z = -0.81 will be 0.2090 and in percentage the value will be 20.90%.

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what is meant by recession

Answers

Answer:

Spatial recession in paintings is the relationship between objects which appear to lie near to the observer and those which seem further away, and thus recede into space. ...

Explanation:

Money you pay up front to reduce the amount you will owe is called a
A. fixed loan
B. late payment
C. down payment
D. short-term loan

Answers

Answer:

down payment

Explanation:

A down payment is money paid upfront in a financial transaction, such as the purchase of a home or car. Buyers often take out loans to finance the remainder of the purchase price.

Answer:

down payment

Explanation:

Three key takeaways from the history of credit in america segment are: _______________

Answers

The first credit card was the Diners Club Card, introduced in 1950. The first bank credit card was created in 1951 by the Franklin National Bank, which is located in Long Island, New York.

Before others realised how profitable credit cards were, it wasn't long before there were 60 credit card programmes operating in the United States by 1953.

It documented the capacity to repay debts and demonstrated accountability for doing so.

The major purchases from American credit history are listed below:

Your credit history is a record of both your accountability and ability to repay debt. Includes the quantity and kinds of credit accounts you've credited, the length of time your account has been open, the balance owed, the amount of credit available, whether you make on-time payments on your bills, and the number of recent credit requests. For having a good credit history, you'll get benefits like lower rates on car and house loans.

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When an employee is terminated, IS administrators should receive advance notice so that they can ________.

Answers

When the employee is terminated the IS administrators should receive advance notice so that they can remove the user account and password.

By terminated, this means that this employee has ceased to be a worker of the organization. As a person that no longer works there, it would be of no use for them to still have access to company facility.

If the user account and the password is not removed, this employee would be able to find his way into the database of the company. He would still have a hold on confidential information.

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A computerized inventory system checks inventory levels at the end of the week and produces suggested orders for the coming week. what kind of system is this?

Answers

A computerized inventory gadget examines stock ranges at the end of the week and produces cautioned orders for the coming week as A periodic review system.

Inventory is the uncooked substances used to provide goods as well as the products which are to be had on the market. it's miles classified as a cutting-edge asset on a corporation's stability sheet. The 3 sorts of stock consist of uncooked substances, work-in-development, and finished goods.

There are four main styles of inventory: raw materials/components, WIP, completed items, and MRO.

The uncooked fabric inventory is at the beginning of the supply chain. those are the materials the products will be produced from. For an instance, steel and rubber are used to produce cars at the same time as textiles, and wooden is the uncooked cloth stock used to supply furnishings. Inventory is an asset due to the fact a organization invests cash in it that it then converts into revenue when it sells the stock. inventory that does not sell as fast as expected may turn out to be a legal responsibility.

The 2 important blessings of stock management are that it ensures you're able to fulfill incoming or open orders and increases income. inventory management additionally: Saves money: information inventory tendencies method you spot how a whole lot of and wherein you have something in stock so that you're better capable of using the stock you have got.

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Which is the best definition of insurance:
A. Insurance lets you pay your bills.
B. Insurance lets you pay a little for protection you might need.
C. Insurance is an expensive way to pay your bills.
D. Insurance costs a lot, but doesn’t pay for much.

Answers

Answer:

I'm trying to decide between B and D, but I think it's D

Explanation:

Insurance does cost a lot, but it's so you have a bit more protection if something happens.

For example:

Let's say you get into a car accident, and you need to stay in the hospital to recover, because you broke a bone, and afterward, you need a prescription of pain medicine. Insurance would pay for your hospital stay I believe, and also pay for part of your prescription. But it costs a lot of money, and your prescription might be really expensive, and there might have been something with your hospital stay that insurance didn't pay for. So basically, Insurance costs a lot, but doesn't pay for much (answer D).

what is the optimal winning percentage of the small market team? enter your response in the decimal format to the second decimal point:

Answers

The optimal winning percentage of a small market team cannot be determined without additional information.

It depends on various factors such as the competitiveness of the league, the team's resources, and the overall level of talent in the league.The optimal winning percentage of a small market team is subjective and depends on several factors.

It is influenced by the competitiveness of the league in which the team participates. If the league is highly competitive, the optimal winning percentage may be higher than in a less competitive league.

Additionally, the team's resources, including financial capabilities, management strategies, and player recruitment, play a significant role in determining the optimal winning percentage. A small market team with limited resources may face challenges in competing with larger market teams, affecting their optimal winning percentage.

Moreover, the overall level of talent in the league can impact the optimal winning percentage. If the league comprises highly skilled teams, achieving a higher winning percentage becomes more difficult, and the optimal winning percentage may be lower compared to a league with lower overall talent.

Given these considerations, without specific information about the league, resources, and competitiveness, it is not possible to determine the exact optimal winning percentage for a small market team.

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List three of your own customer turn-offs.
Explain how a business could make positive changes so you
would not have to experience each of these turn-offs.

Answers

Three customer turn-offs and how a business could make positive changes to avoid these turn-offs are stated as follows:


1. Long wait times: A significant customer turn-off is having to wait for a long time, whether it's for service, assistance, or product delivery. To make positive changes, a business could improve its staffing levels, provide efficient training for employees, and implement better scheduling and queue management systems.

2. Poor customer service: Another customer turn-off is receiving poor customer service, which could include rude or unhelpful staff, lack of product knowledge, or a slow response time to inquiries. A business could improve in this area by investing in employee training, implementing regular performance evaluations, and ensuring a strong customer service culture.

3. Hidden fees or charges: Customers are often turned off by hidden fees or charges that they were not aware of when making a purchase decision. To avoid this turn-off, a business could be more transparent with their pricing, clearly communicate all fees upfront, and simplify the purchasing process to reduce confusion.

By addressing these three customer turn-offs, a business can create a more positive experience for its customers, leading to increased satisfaction and loyalty.

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product differentiation is a key component of monopolistic competition. label each of the following scenarios according to how products are differentiated.

Answers

Product differentiation is crucial in monopolistic competition. Companies that can distinguish their products from others in the market can generate profits because of their unique product characteristics.

Product differentiation is a fundamental aspect of monopolistic competition. In this type of competition, businesses offer a wide variety of products to customers. Each company tries to distinguish its product from others by making it unique. These characteristics may be the product's quality, pricing, location, or customer service, among other things. Therefore, firms can earn profits as a result of monopolistic competition because they have some monopoly power based on their unique product characteristics.
Scenarios for labeling the products according to how they are differentiated are given below
1. Designer jeans are a premium brand of jeans that are known for their quality and style. These jeans are differentiated based on their uniqueness, and thus, the products can be categorized as highly differentiated
2. In a small town, there are several coffee shops, each with a different ambiance and menu. Some of them have an extensive range of vegan and gluten-free options. Some shops have limited options and a few have free Wi-Fi. This scenario suggests that the coffee shops are offering differentiated products based on quality, service, and location.
3. A furniture store that sells trendy furniture pieces, including custom-made items, is an example of a firm that offers highly differentiated products. Customers may visit the store to find unique furniture items that cannot be found in other stores.
4. A gas station chain that is found on almost every corner in a large city offers standardized products. Gasoline prices, quality, and the service provided are mostly the same at every location. This scenario suggests that the gas station chain is offering standardized products.
In conclusion, product differentiation is crucial in monopolistic competition. Companies that can distinguish their products from others in the market can generate profits because of their unique product characteristics.

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A central bank would like to increase the money supply in the country. It
achieves this by buying treasury securities from investors who had purchased
them earlier. Investors who sell their securities now have more money on
hand to invest in businesses.
This action best illustrates the central bank's use of which tool of monetary
policy?
A. Open market operations
B. Reserve requirements
C. Discount rate
D. Interest on reserves

Answers

Answer:

A) Open Market Operations

Explanation:

I just got it right

Open market operations action is best illustrates the central bank's use of which tool of monetary policy. Thus, option (a) is correct.

What is investors?

Anyone who makes investments in a business, organization, or piece of real estate is referred to as a “investor.” Shares of corporations, bonds, and debentures are frequently bought by investors.

A central bank implements monetary policies by expanding the money supply through open market transactions. They affect central bank reserve balances and moderate changes to regularly occurring interest rates.

Therefore, option (a) open market operations is correct.

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seedbed preparation
activities
1.cleared the area

Answers

Get your supplies lay them out and start your seed preparing with paper towel water and the seeds

a price was decreased by 12. then it was decreased by an additional 5%. what is the percent of the total decrease?

Answers

The total decrease of price percentage is 16.4% when the price was decreased by 12% .

Evaluating decrease price :

The first discount reduces the price to (100 - 12)%

                                   = 88%  which is 0.88 times the original price.

The second discount reduces the already discounted price to

                                     (100 - 5)% =

                     95% of the discounted price

(0.95 times the discounted price). Get 2 discounts combined

Final Price = (0.95)(0.88) x (Original Price)

                             = 0.836 x (Original Price)

This is 83.6% of the original price, so the total discount rate is

                                (100 - 83.6)%

                                      = 16.4%.

What is the discounted price?

Discount pricing is a type of promotional pricing strategy that involves lowering the original price of a product or service with the goal of increasing traffic, moving inventory, or increasing sales. Consumers are attracted to low prices because they want to feel they are getting a good deal.

Why are discounted prices used?

Businesses use discount prices to sell lower-priced products in bulk. Reducing costs and staying competitive are key to this strategy. Large retailers can request discounts from their suppliers, making discount pricing strategies effective when purchasing in bulk.

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Who has a tw octane on rocket leage?

Answers

Answer:

I do :)

Have a great day!

Answer:

me

Explanation:

What are some common spreadsheets applications?​

Answers

USES ( APPLICATIONS) of spreadsheet are;

1) to create budgets : Excel can be used in creation of budget s which is the estimation of revenue as well as expenses which covers specified future period of time.

2)produce graphs and charts: it's application is helpful in creating graphs in mathematics as well as statistics

3 for storing and sorting data: Data sorting can be done using spreadsheet. It involves arrangements of data into an order in order to make analysis of the data easier.

SPREADSHEET APPLICATION

1)Microsoft Excel : This is used in data

crunching , it can handle large data sets.

2)LibreOffice : it's applicable in Calc for a free as well as native spreadsheet app.

4) Smartsheet: is useful when handling

task involving non-spreadsheet and can be used for project management.

5)Quip : it's useful for integration of

spreadsheets into shared documents.

Impotence of public companies in South Africa

Answers

As publicly traded entities, companies in South Africa are subject to strict regulations, including disclosure requirements and corporate governance standards.

Public companies have a duty to act in the best interests of their shareholders and to ensure that their financial statements are accurate and transparent. They are also subject to oversight by regulatory bodies such as the Johannesburg Stock Exchange and the Financial Sector Conduct Authority. Additionally, public companies have access to a broader pool of investors and capital, which can enable them to grow and expand more quickly. However, the increased scrutiny and regulatory burden can also make it more challenging for public companies to operate, and the pressure to meet shareholder expectations can sometimes come at the expense of other stakeholders.

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What is the fastest and most effective way for a company to realize its maximum profit?

Answers

The fastest and most effective way for a company to realize its maximum profit it is to get its pricing right.

Increasing the sales price of the products or services is considered to be one of the easiest ways in order to increase the profitability. So, when increasing the prices, it's important in order to understand the consumer expectations of the pricing in order to maintain the organization's revenue.

However, the fastest and most effective waywhich is for a company to realize maximum profit is in order to get its pricing right. Thus, the right price is said to boost profit faster than its increasing volume will; whereas the wrong price can shrink it just as quickly.

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With reference to the IMDG code, explain your understanding of the terms ‘UN Number’, ‘trade name’ and ‘subsidiary risk’ in relation to dangerous goods.

Answers

In the context of the International Maritime Dangerous Goods (IMDG) Code, the terms "UN Number," "trade name," and "subsidiary risk" are relevant to the classification and identification of dangerous goods.

1. UN Number: UN Number stands for United Nations Number. It is a unique four-digit numeric identifier assigned to specific dangerous substances or articles. The UN Number provides a standardized identification system for hazardous materials during transportation, ensuring proper handling, storage, and emergency response. Each UN Number corresponds to a specific substance or article, and it helps in identifying the nature and hazards associated with the material.

2. Trade Name: Trade name refers to the commercial or brand name of a product. In the context of dangerous goods, the trade name is the name given to a particular hazardous substance or article by the manufacturer or supplier. It may differ from the chemical or technical name of the substance but serves as a recognizable name in commerce.

3. Subsidiary Risk: Subsidiary risk refers to additional hazards associated with a dangerous good apart from its main hazard. Some dangerous goods may possess multiple hazards, and subsidiary risks help in identifying and communicating these additional hazards. The IMDG Code provides specific classification criteria for subsidiary risks, which are indicated by assigned codes and labels on the packaging and documentation.

In the context of the International Maritime Dangerous Goods (IMDG) Code, the terms "UN Number," "trade name," and "subsidiary risk" are relevant to the classification and identification of dangerous goods.

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In the space below, explain how you can access the character map in Word 2016 using a complete sentence.

In the space below, explain how you can access the character map in Word 2016 using a complete sentence.

Answers

Answer:

Following are the solution to this question:

Explanation:

This method through clicking the "Start" key and select mostly on Software sub-menus, but instead clicking mostly on Accessories submenus of its Programs menu, and afterward the System Tools character sub-menu, select the "System Tools;" then click on the "Tools" key of the "Tools" table to display the actor application.  

In Windows 10 you also can access that Character Map by pressing, that Windows icon, then click mostly on Character Chart to view, that Character Map button.

Answer:

Click Start, point to Settings, click Control Panel, and then click Add/Remove Programs. Click the Windows Setup tab. Click System Tools (click the words, not the check box), and then click Details. Click to select the Character Map check box, click OK, and then click OK.

Explanation:

support Microsoft

What does health insurance cover? If you pass will they help with funeral cost?

Answers

Actually I’m pretty sure funeral insurance and health insurance are two totally separate types of insurance.

Answer:

Funeral or bereavement expenses aren't considered medical expenses and can't be paid for using funds from a Medical Savings Account plan. 

Max is using a search engine to do research on trends in his industry when he comes across a website that isn’t necessarily related to his research–but is interesting and engaging. Without realizing it, Max spends over an hour browsing through the webpage’s numerous articles and links. When his boss asks him if his research report will be ready by the end of the day, Max isn’t sure how to respond. He’s hardly done any work–but it’s not like he was purposely avoiding work. He was using the search engine for the purpose of research, after all. It’s not his fault that the search results weren’t very relevant. Max is considering asking his boss for an extension on his deadline so that he can spend more time researching. What do you think? What should Max do?

Answers

In this situation, Max has to first give his boss some advance notice that he wont be able to complete the report before deadline, explain himself briefly as to why that is, then ask for more time to be able to complete the task.

What is a deadline?

A deadline indicates that a task or project is anticipated to be finished by that date and time. There is a clear expectation of what must be provided and by when thanks to deadlines. Employees are able to take charge of their work in this way and include deadlines into their time management techniques.

It's critical to schedule deadlines in advance because your work may be delayed. Recognize that some resources might be delayed and that some people might not be available. You may prevent the disaster of missing a deadline by making plans in advance.

Deadlines are crucial in business for a variety of reasons. They establish standards and encourage productive behavior in the workplace.

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All of the following are assumptions of cost-volume-profit analysis except a.the sales mix is constant. b.costs can be divided into fixed and variable components. c.there is no change in inventory quantities during the period. d.within the relevant range of operating activity, the efficiency of operations can change.

Answers

Answer:

d. within the relevant range of operating activity, the efficiency of operations can change.

Explanation:

Cost-volume-profit analysis is also known as the break even analysis, it is an important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is. It is used to determine how changes in differing levels of activities such as costs and volume affect a company's operating income and net income.

Generally, to use the cost-volume-profit analysis, financial experts usually make some assumptions and these are;

1. Sales price per unit product is kept constant.

2. Variable costs per unit product are kept constant and the total fixed costs of production are kept constant i.e costs can be divided into fixed and variable components.

3. All the units produced are sold i.e there is no change in inventory quantities during the period.

5. The costs accrued are as a result of change in business activities.

6. A company selling more than a product should simply sell in the same mix i.e the sales mix is constant.

Hence, the aforementioned are assumptions of cost-volume-profit analysis except that, within the relevant range of operating activity, the efficiency of operations can change.

All of the following are assumptions of cost-volume-profit analysis except within the relevant range of operating activity, the efficiency of operations can change. Thus, option D is the correct option.

The break-even analysis, also known as cost-volume-profit analysis, is a crucial technique for forecasting the amount of activity, expenditures to be incurred, sales to be produced, and profits to be realized. It is employed to assess how variations in various activity levels, such as expenses and volume, impact an organization's operating income and net income.

Financial professionals typically utilize the cost-volume-profit analysis and base their decisions on the following assumptions:

The unit sales price of the product is constant.The overall fixed costs of production are maintained at a consistent level, allowing for the division of costs into fixed and variable components.

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Which type of research is considered the gold standard for testing criminal justice policies and practices? runaway slaves lived in camps called what, where disease and malnutrition were rampant, and the men were required to perform menial tasks like cooking meals, raising fortifications, and laying railroad tracks? Which term describes the bending of a wave as it travels into a different medium? Sulfate in soil on Mars. In 2008, Professor Sam Kounaves and his students at Tufts University had the thrill of their lifetime as their Wet Chemistry Laboratory aboard the Phoenix Mars Lander returned a steam of information about the ionic composition of Martian soil scooped up by a robotic arm. The arm delivered ~1 g of soil through a sieve into a "beaker" fitted with a suite of electrochemical sensors. Aqueous solution added to the beaker shown in the figure leached soluble salts from the soil while sensors measured ions appearing in the liquid. Unlike other ions, sulfate was measured by a precipitation titration with Ba+: BaCl2(8) Ba2+ (aq) + 2 C1-(aq) so - (aq) + Ba2+(aq) BaSO4(s) As solid BaCl, from a reagent canister slowly dissolved in the aqueous liquid, BaSO4 precipitated. A barium sulfate precipitation titration is shown in the figure. The initial concentration of Cl- before adding BaCl, was 0.00019 M in 25 mL of aqueous extract of Martian soil. At the end point, when there is a sudden rise in Ba2+, [C1-] = 0.0096 M. -2.0 log (concentration, M) - 1.0 Leaching solution added Cl- calibration solution added CI- Soil added and BaCl2 begins to enter cell Cl- = 0.009 6 M -3.0 at end point -Cl = 0.000 19 M before BaCl2 addition 4.0 Ba2+ End point -5.000 0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 Time (h) Write the titration reaction. titration reaction: How many mmol of BaCl, were required to reach the end point? millimoles of BaCl2: mmol How many mmol of So were contained in the 25 mL? millimoles of S02 : mmol If so2 is derived from 0.920 g of soil, what is the wt% of so in the soil? True or false Synapses can only be lost throughout a lifetime, and new ones can't be added. _____________ research, generally is performed by scientists at colleges and universities, extends the boundaries of what we know.Basic By law, we must how much.... federal income tax to deduct from your pay. A. calculable B. calculation C. calculate D. calculator Please look for the question in the picture.