Assume current assets totaled $57,000 and the current ratio was 1.2 before the following independent transactions:
(1) Purchased merchandise for $6,000 on short-term credit.
(2) Purchased a delivery truck for $29,000. paid $3,000 cash and signed a two-year interest-bearing note for the balance.
Required:
Compute the current ratio after each transaction.
Transaction current ratio
1) ?
2) ?

Answers

Answer 1

In contrast to case 2, which has a current ratio of 1.35, case 1 has a current ratio of 1.42.

How do you describe current ratio?

Recognizing current ratios. With the help of cash, inventory, and short-term receivables, a company can determine how well its short-term or current liabilities, such as debts and payables, can be covered.

The ability of a corporation to meet its immediate financial obligations is determined by the current ratio, a liquidity ratio.

How to Calculate the Current Ratio?

The method for computing the current ratio is rather straightforward: Just multiply the organization's current liabilities by the current assets. In contrast to current assets, which can be turned into cash within a year, current liabilities are obligations that must be paid within a year. Current assets include things like cash, inventory, and accounts receivable. Current liabilities include, but are not limited to, accounts payable, salaries due, and the current portion of any anticipated interest or principal payments.

Current ratio = Current assets ÷ Current liabilities

So, the current liabilities is

= $57,000 ÷ 1.2

= $47,500

where,

Current assets = $57,000 + $6,000 = $63,000

Current liabilities = $47,500 + $6,000 = $53,500

So, the current ratio is

= $63,000 ÷ $53,500

= 1.18 times

where,

Current assets = $63,000 - $3,000 = $60,000

Current liabilities = $47,500 + $6,000 = $53,500

So, the current ratio is

= $60,000 ÷ 53,500

= 1.12 times

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Related Questions

you have just been chosen as an advisor to the president. after years of constant growth, the u.s. economy is beginning to fall into a recession. what type of fiscal policy will you suggest to the president, and why?

Answers

During the economic recession, I would suggest the government to employ expansionary fiscal policy to fuel economic growth.

Fiscal policy is the use of government spending and taxation to influence the economy. Recession is the condition of declining economy wherein stock markets end in crashing limits. The expansionary fiscal policy aims as lowering the taxes and increasing the government spending. It helps to boost the demand chain through monetary and fiscal stimulus. The Federal Reserve has three expansionary monetary policy methods which are lowering bank interest rates, decreasing banks' reserve requirements, and buying government securities. Thus, in return these methods increase the availability of funds and hence improves the economic growth.

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according to okun's law, when the natural employment rate is 6 percent and potential gdp is $10 trillion, then when actual employment is 5 percent, real gdp is group of answer choices

Answers

When actual employment is 5 percent, Real GDP is $10.2 trillion.

What is GDP?

The market worth of all the final goods and services produced and sold (not resold) by nations within a given time period is measured in dollars by the gross domestic product (GDP). This measurement has undergone revisions before it can be trusted as indicator because of how complicated and arbitrary it is. However, GDP (nominal) per capita does not account for variations in the cost of living and the rate of inflation of the various nations; as a result, using a basis of GDP per capita at purchasing power parity (PPP) may be more useful when comparing living standards between countries, whereas nominal GDP is more useful when comparing national economies on the global market. The contribution of each industry or sector of the economy to the total GDP can also be determined.

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q9: you produce widgets. currently you produce 4 widgets at a total cost of $40. suppose you could produce one more widget (the fifth) at a marginal cost of $5. if you do produce that fifth widget, what will your average total cost be? has your average total cost increased or decreased?

Answers

$10 per widget is the average total cost.

What is marginal cost?

The marginal cost in economics is the difference between the total production costs brought on by developing or producing an additional unit. Divide the variation in manufacturing costs by the variation in quantity to determine marginal cost. Finding the point at which an organization can realize economies of scale to production & overall operations is the goal of marginal cost analysis. The producer may make money if the marginal cost of making one extra unit is less than the price per unit.

The sum of the costs incurred in producing an extra good is referred to as the "marginal cost." It can therefore be evaluated by changes in the costs associated with each additional unit. Manufacturers commonly employ the marginal cost concept from managerial accounting and economics to establish the appropriate level. A cost increase of one unit in manufacturing volume is something that manufacturers routinely think about.

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which term is used to describe the movement where women with college educations leave the workplace to care for children? quzilet

Answers

The word "parental leave" may be used interchangeably with "maternity leave," "paternity leave," and "adoption leave," or it may be used separately from "maternity leave" and "paternity leave" to designate separate family leaves accessible to any parent to care for young children.

What is the formal name for parental leave?

Parental leave, sometimes known as "bonding leave," is time off used by parents to bond with their new child. Maternity leave in California is a combination of parental leave and pregnancy disability leave for women. Parental leave has been provided as a legal entitlement and/or government program in some form or another for many years. When a company is compelled to keep an employee's employment while that person is on leave, unpaid parental or family leave is offered. Paid parental or family leave is time off from work taken to care for or make preparations for the wellbeing of a child or dependent family member.

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Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 0.70. Based on the CAPM approach, what is the cost of equity from retained earnings?
a.9.25%
b.7.78%
c.7.08%
d.7.00%
e.8.47%

Answers

Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach

The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).

A linear relationship between the required return on investment and risk is established by this financial model.

Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.

The calculation is shown below.

Cost of equity = Risk-free rate + (beta * Market risk premium)

Cost of equity = 4.10% + (0.70 * 5.25%)

Cost of equity = 4.10% + 3.675%

Cost of equity = 7.77% or 7.78%

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your company is preparing to enter into a partner relationship with another organization. it will be necessary for the information systems used by each organization to connect and integrate with each other.

Answers

Make that the integration procedure maintains the network security of each organization.

What is partnership?

A written agreement among two or more people or businesses, which most frequently creates a commercial partnership, is the basis for this type of legal connection. Each partner makes a financial investment in the company, shares in any gains, and takes a portion of any losses. The partnership must frequently register as a business with each state in which it conducts business. You may be able to create a variety of partnerships in each state, so it's important to be aware of your options before registering.

Some partnerships include people who work for the company, while others could include partners with little involvement who also have limited accountability for the company's debts and any legal actions brought against it.

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what qualities and characteristics should be considered when choosing a sponsor for a fraud risk assessment?

Answers

The type of the firm; The environment in which it operates; The efficacy of its internal controls; and The morals and values of the business and its employees.

What three factors must you take into account while doing a risk assessment?

Figure out any potential health or safety risks at your place of employment (hazards) Take steps to lessen the possibility of injury or, if this is not possible, control the risk once it has been determined how likely it is that someone could be injured and how seriously (the risk).

What qualities make a risk assessment effective?

Risk assessment is most effective when used in the context of corporate strategy and takes into account factors including impact, likelihood, velocity, and persistence. Risk management demands a process with a distinct goal, dependable inputs, well-designed activities, and value-added outputs much like any other worthwhile company activity.

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skilling incorporated has the following information on one of its investment center departments. sales: $9,800,000; income: $766,500; and investment center assets: $3,650,000. management has set a target income of 11.5% of investment center assets. what is the department's residual income?

Answers

If the management has set a target income of 11.5% of investment center assets. The department's residual income is: $346,750

How to find the residual income?

Using this formula to find the residual income

Residual income =Income-(average assets × percentage   of target income)

Let plug in the formula

Residual income = $766,500-($3,650,000×0.115)

Residual income = $766,500- $419,750

Residual income = $346,750

Therefore we can conclude that the residual income is the amount of $346,750.

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3. if a company deposits $100,000 into an account that earns a market interest rate of 10% per year at a time when the deflation rate is 1% per year, what will be the purchasing power of the accumulated amount (with respect to today's dollars) at the end of 15 years?

Answers

Accumulated value, additionally referred to as accumulated amount or cash value, is calculated as the sum or complete of the preliminary investment, plus interest earned to date.

It's the total quantity an investment currently holds, consisting of the capital invested and the activity it has earned to date.

Is gathered price the same as future value?

Present value is the equivalent value today of some amount to be obtained or paid in future and future fee is the gathered price in future of an amount acquired or paid today. The equivalency arises due to the fact a money float that manifest at time 0 can accumulate interest.

What is amassed quantity in annuity?

The Accumulation Value or Account Value is the modern price of your annuity. Annuity accumulation is equal to the amounts in the declared hobby account and index participation accounts, which are decreased via any rider fees, and withdrawals taken from your annuity. Basically, this is what your annuity is worth.

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Susan jones purchased 1,000 shares of lmn corporation on august 1st, 2019. On may 15th, 2022, susan died, and her shares were inherited by her niece. Which characteristic of the corporate form of business allows the daily operation of lmn to be unaffected due to the death of a stockholder?.

Answers

Continuous life characteristic of the corporate form of business allows the daily operation of LMN to be unaffected due to the death of a stockholder.

What is Continuous life characteristic of the corporate business  ?

A corporation's life is specified in the charter that the state grants it, and the majority of contemporary companies choose to have a permanent existence. A corporation's ability to continue as a going concern is unaffected by the resignation, death, or disability of a stockholder, worker, or officer since it is a separate legal entity.

A company is considered to have "continuous life" if its owners shift or pass away because this does not cause it to end. Contrary to partnerships, a corporation remains in operation until it is terminated by its owners or by a governmental body.

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hydralicious, a juice bar, has been looking to expand its business. the company has given a few entrepreneurs in different locations the license to operate under its name. the entrepreneurs have permission to use the company's reputation and the business model to run operations. the entrepreneurs will be charged a fee, but they will also get a percentage of the profits. which of the following strategies is hydralicious most likely to be using?

Answers

The most likely use of franchising by Hydralicious, is determined by question's strategies.

What exactly is a franchise business?

A franchise is a company in which the owner, in return for a franchise fee, licenses its operations as well as its goods, branding, and know-how. The company that sells licenses to franchisees is known as the franchisor.

What are the 4 different kinds of franchising?

The four different franchise company models that you can purchase as an employment or operator franchise. The fact that these auto detailer franchises are typically home-based helps to reduce overhead costs to a minimum.

corporate management.franchisees in retail and fast food.Franchise for investments

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A new car is purchased for 26,400 dollars. The value of the car depreciates at a rate of 5% per year. Which equation represents the value of the car after 5 years?.

Answers

There are nine years left until the car is worth 11300 dollars.

The formula that can be used to determine this is as follows:

The car's value is equal to the purchase price minus the annual depreciation costs times N.

N is the number of years until the car is worth $11,300. Purchase price = $24,600 Annual depreciation rate = 5.5 percent Annual depreciation expenses = $24,600 * 5.5 percent = $1,353 Car value = $11,300 By substituting the value into equation (1) and finding the solution for N, we have the following results:

$11,300 = $24,000 minus ($1,353 * N) $1,353 * N = $24,000 minus $11,300 $1,353 * N = $12,700 N = $12,700 / $1,353 N = 9.38654841093865 We have:

N equals 9, so there will be nine years before the car is worth 11300 dollars.

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he need to increase monetary growth to match the u.s. b. the increase in the cost of goods from the u.s. c. the increase in the cost of oil​ (oil shocks) caused by excess u.s. demand. d. synchronized business cycles.

Answers

The need to increase monetary growth is d. synchronized business cycles.

Monetary growth is instantaneous earnings that retrieve from direct commercial enterprise operations. Examples: income from funding, salary or wages, earnings one makes from any keep, etc.

Inflation is regularly taken into consideration as an economic phenomenon, which it can be, but that is dependent on monetary conditions. The Fed can extend the money delivered by way of decreasing interest quotes to stimulate borrowing or by way of purchasing assets, but it cannot inject money directly into items and offerings markets.

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Bill is a member of the Conway City Council. He wants to run for the post of Mayor of Conway in the upcoming elections. This perceived state for which he aspires is called his _____.
actual state
desired state
regressive state
current state
temporary state

Answers

This perceived state for which he aspires is called his desired state.

The existing state/desired nation technique is a method to decide the actual trouble with the aid of first describing the existing state (in which you are) after which describing the desired state (in which you need to move).

A preferred nation ought to replicate a exchange in situations in preference to an final results. useful desired states help making a decision what to do. Now not useful preferred states clearly restate components of your goal.

The desired state is the definition of what your enterprise will appear to be and could have done as soon as your approach is complete. That is one of the most motivating components of strategic planning Due to the fact this is in which you may freely dream about your ultimate purpose.

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a principal of is invested at interest, compounded annually. how many years will it take to accumulate or more in the account? (use the calculator provided if necessary.)

Answers

You will therefore have interest, at least $[tex]2000[/tex] in the account after approximately 8 years and 5 months.

When calculating interest over time, use the following formula:

A = P [1 + (r/n)] ^(nt) .where n = how many times you compound during a year, t = time in years, A = new amount in the account, P = principal, r = percent rate as a decimal, and

[tex]A = 2000 \sP = 1500 \sr = 0.035 \sn=1[/tex]

So, you obtain:

[tex]2000 = 1500 (1+0.035)^t[/tex]

Multiply by 1500:

[tex](4/3) = (1.035)^t[/tex]

Put "ln" to use on both sides:

[tex]ln(4/3) = t*ln (1.035)[/tex]

Do the logarithm calculations:

[tex]0.28768 = t*0.03440[/tex]

Divide both sides by[tex]0.03440:[/tex]

[tex]8.36[/tex] years, or t

You will therefore have at least $[tex]2000[/tex] in the account after approximately 8 years and 5 months.

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Bond Prices Are Sensitive To Changes In Yield When The Bond Is Selling At A Initial Yield To Maturity, A. More; Lower B. More; Higher C. Aggregate supply; Left D. Aggregate supply: Right

Answers

The higher a bond or bond fund's duration, the more sensitive the bond or bond fund to changes in interest rates.

Bond mutual funds are similar to stock mutual funds in that you pool your money with other investors' money, and a professional makes investments from that pool of money based on what they believe to be the best opportunities.

Bond funds often hold a variety of distinct bonds with varying maturities, so if an issuer defaults on interest or principal payments, the effect on the performance of any one bond is mitigated. Broad market bond funds, for example, provide exposure to corporate, U.S. government, government agency, and mortgage-backed bonds while also diversifying across different bond sectors.

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when a company seeks to match the benefits of a successful position it has identified while maintaining its existing position in offering customers a variety of differing services, what is this process called?

Answers

When a company seeks to match the benefits of a successful position it has identified while maintaining its existing position in offering customers a variety of differing services, the process called straddling.

A client is someone who purchases goods, services, products, or ideas from a seller, vendor, or supplier in return for money or another useful consideration. This definition applies to sales, business, and economics.

Customers who frequently do business with a seller establish customs that enable regular, sustained commerce, which in turn enables the seller to create statistical models to optimize production processes that alter the nature or form of goods or services, as well as supply chains that alter the location or formally recognise ownership or entitlement transactions.

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the current interest rate on comparable debt is 7 percent, so the bond initially sells for $713. what is the accrued interest on the bond for each of the next five years

Answers

The accrued interest on the bond for each of the next five years is 57.4 Each.

Solution:

Accrued Interest Total = Face Value - Discounted Price Initially

= 1000 - 713

= 287

Price Of a Bond = Faces Value Multiplied by PV Factor of Years 1,2,3,4,5 Respectively.

Year 1 = price ay 1-year end - Previous Year Price

=  763 - 713

= 50

By Simple Amortization it will be = Total Accrued Int / No. of years

= 287/5 = 57.4 Each.

Accrued interest refers to interest accrued on an outstanding debt during a specified period, but payment has not yet been made or received by the borrower or lender. Accrued interest is the amount of interest on a liability. Bonds have been earned but not yet redeemed.

Interest accrues from the date of issue of the loan or coupon payments on the bond but the coupon payments are made only twice a year. Calculating accrued interest is important to understand how much you owe when you buy a bond, and how much you will have to pay on your next credit card statement is how it works. Accrued interest is interest on unpaid outstanding loans.

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common property resources tend to be part 2 a. overused. b. used by the government only. c. efficiently used. d. underused. e. not used at all.

Answers

common property resources tend to be partially overused.

property resources

In general, there are two categories of common property resources. Mobile assets with a worldwide reach are subject to "open access," which means that everyone has access to them in theory. The classic example is the Earth's atmosphere, which serves as both a source of human well-being and a sink for deposited effluents.

Grazing pastures, threshing grounds, lands temporarily taken out of agriculture, inland and coastal fisheries, irrigation systems, woods, forests, tanks, ponds, and recreation grounds are all examples of local commons. Property rights to local commons have been discovered to be most typically dependent on custom and practice in underdeveloped nations.

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The cost of capital is an appropriate name since a project must earn enough to pay those who ______ the capital.

Answers

The cost of capital is an appropriate name since a project must earn enough to pay those who supply the capital.

A project is any project, achieved personally or collaboratively and likely involving research or layout, this is carefully deliberate to obtain a selected intention. An opportunity view sees a venture managerially as a series of events: a "set of interrelated responsibilities to be executed over a fixed period and within the sure price and different barriers".

A challenge may be a brief (in preference to a permanent) social machine (painting device), probably staffed via groups (within or across corporations) to perform precise duties below time constraints. An assignment may additionally shape part of wider program management or characteristic as an ad hoc machine.

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in 2021, singh had a net capital loss of $5,650 and taxable income of $110,000. what is singh’s loss carryforward to 2022?

Answers

If in 2021, singh had a net capital loss of $5,650 and taxable income of $110,000. singh’s loss carryforward to 2022 is : $2,650.

How to find the loss carryforward?

Using this formula to find the loss carryforward to 222.

Loss carryforward = Net capital loss - Standard Deductible

Where:

Net capital loss = $5,650

Standard deductible = $3,000

Let plug in the formula

Loss carryforward =  $5,650 - $3,000

Loss carryforward = $2,650

Therefore the Loss carryforward  is $2,650.

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a project has estimated annual net cash flows of $69,000 and is estimated to cost $448,500. what is the payback period?

Answers

The initial investment will be recovered exactly six times  is the payback period.

What benefits does the payback period offer?

Payback time is a useful indicator of investment risk. The risk is lower for the project with the shorter payback time than for the project with the longer payback period. When choosing a project, the repayment period is frequently used as a key criterion along with liquidity.

Briefing:

Giving the following information:

Cash flow= $69,000

Initial investment= $448,500

The amount of time needed for the cash flow to recover the initial investment is known as the payback period:

Year 1=  69,000 - 448,500= -379,500

Year 2=  69,000 - 379,500= -310,500

Year 3=  69,000 - 310,500= -241,500

Year 4=  69,000 - 241,500= -172,500

Year 5=  69,000 - 172,500= -103,500

Year 6=  69,000 - 103,500= 34,500

The initial investment will be recovered exactly six times.

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wendy uses a different, condescending tone to talk to certain employees. what is the most likely type of conflict she has with them?

Answers

Relational is the most likely type of conflict she has with them.

The concept that a children's book should in some manner instruct the reader is perhaps one of the most widespread assumptions that we covered in class. Of course, we discussed the term didactic and how a didactic text aggressively urges the reader to learn a lesson by telling them they should believe this or that. There is sometimes no justification provided for the lesson, as though the young reader should simply accept it because they are taught to or because someone else knows better. I was reading the book I chose for the project, Cat in the Hat by Dr. Seuss.

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which of the following is an intended beneficiary to a contract? a person whose residential property value goes up as the result of a city's agreement with a commercial land developer a spouse of a beneficiary of an insurance contract the owner of a pizzeria who sells more pizza due to a convention being held nearby a beneficiary of an insurance contract

Answers

The correct answer are (A) Intended beneficiaries may enforce their rights to a contract when both parties to the contract intended for the third party to benefit.

A person or legal entity that has been specifically identified in the terms of a contract as one that is intended to receive the benefits connected with the execution of the contract in question is referred to as an intended beneficiary.

What is an example of an intended beneficiary?

A typical example of an intended beneficiary under the terms of a life insurance contract is the person listed as the beneficiary on a life insurance policy, who will receive the death benefit in the event that the insured passes away.

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Which of the following is a correct statement regarding the rights of an intended beneficiary?

A. Intended beneficiaries may enforce their rights to a contract when both parties to the contract intended for the third party to benefit.

B. Intended beneficiaries have the same rights under a contract as incidental beneficiaries.

C. Intended beneficiaries may enforce their rights to a contract, even if the parties to the contract did not specifically (in other words, purposefully) intend for the third party to benefit.

D. Intended beneficiaries have no rights under a contract.

E. Intended beneficiaries may enforce their rights to a contract if only one of the parties to the contract intended for the  third party to benefit.

mike always rotates tires and changes oil for his own car at home. his effort is included in gdp. group of answer choices true false

Answers

mike always rotates tires and changes oil for his own car at home. his effort is included in GDP. This statement is true. So the value of oil changing will be included in the GDP if it is done by Speedy lube and mike pays them for it but it will not be included if she does it herself because no one pays her for it.

What factors are consider in GDP?

The GDP only includes newly manufactured products, including those that raise inventories. Excluded from this are sales of secondhand goods and sales from stockpiles of products from prior years. In addition, our GDP only includes items that are made and sold legally.

Personal consumption, corporate investment, government spending, and net exports are the four main components of the gross domestic product. That reveals what a nation excels at generating. The nation's annual total economic production is measured by its GDP. It is comparable to the amount that is spent in that economy.

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What kind of claim is used for billing provider fee-for-service claims to commercial health insurance companies?.

Answers

CMS-1500 is the type of claim used to charge commercial health insurance companies for provider fee-for-service claims.

How do providers and billing providers differ from one another?

The insurance payor that is sending in the claims for payment is given instructions by the billing provider for how to send the reimbursements. The person in charge of monitoring the reporting provider and the reported care is known as the supervising provider.

what is A single source could serve both purposes.?

o The rendering supplier should be omitted if the billing provider is the same organization as the rendering provider. o The taxonomy and NPI for the specific rendering provider must be used when billing. o The rendering and referring providers shouldn't be the same.

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in order for an aquifer to use useful for human consumption, what kind of porosity and permeability should it have?

Answers

An aquifer must be utilizable for human usage It should have a high porosity to permeability ratio.

What is permeability, exactly? 

The ease with which liquids, gases, or particular compounds can move through a substance is measured by its permeability. By applying a head then measuring the penetration depth or perhaps the volume of liquid or gas moving through the sample, permeability is ascertained.

What does water permeability mean? 

The rate at which irrigation water is applied to the soil is known as the permeability rate. Water will pool just on surface and eventually run off if an irrigator provides water at a rate that is quicker than the soil can absorb it, leading to uneven irrigation and soil degradation.

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what factors increase the likelihood that a supervisor will treat subordinates in an abusive way? (choose every correct answer.)

Answers

The factors increase the likelihood that a supervisor will treat subordinates in an abusive way is aggressive norms within the organization, and abusive role models.

The supervisor's overall responsibilities include communicating organizational needs, monitoring employee performance, offering guidance and support, identifying areas for development, and managing the mutually beneficial relationship between staff and the organization to ensure that both parties succeed.

They exhibit all of the behaviors and attitudes that they demand of their staff, follow all policies and procedures, mirror the company's culture and values, and show leadership by setting an excellent example. Furthermore, excellent supervisors sometimes put in just as much as or even more effort than the people they are in charge of.

The given question is incomplete, the complete question is:

What factors increase the likelihood that a supervisor will treat subordinates in an abusive way? (Choose every correct answer.) Multiple select question.

Having a self-aware personality

Aggressive norms within the organization

Abusive role models

The Dunning-Kruger effect

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Standardized agreements to buy or sell a specified amount of currency at a date in the future at a pre-determined price are called_____.

Answers

Standardized agreements to buy or sell a specified amount of currency at a date in the future at a pre-determined price are called futures contract

What does the term "future contract" mean?

A futures contract is a written agreement to buy or sell a specific commodity asset, securities, or both at a defined price at a specific future date. To make trading on a futures exchange easier, futures contracts are standardized for both quantity and quality.

What distinguishes a forward contract from one for the future?

A forward contract, which settles at the conclusion of the contract and is exchanged over the counter, is a private and adaptable contract. A futures contract is a legal agreement with predetermined conditions that is traded on a market where prices are settled every day until the contract's expiration.

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what is the price of a treasury strips with a face value of $100 that matures in 8 years and has a yield to maturity of 8.0 percent?

Answers

$53.39 is the price of a treasury strips with a face value of $100 that matures in 8 years and has a yield to maturity of 8.0 percent. Price = $100 / (1 + .080/2)^2(8) = $53.39.

What is treasury strips?

U.S. bonds known as Treasury STRIPS are offered at a discount to face value and are fully repaid when they mature. STRIPS are treasury bonds that trade as separate securities for the principal and coupon payments. Holders of STRIPS only receive the ultimate payout on the maturity date instead of any coupon payments.

Although technically issued by securities dealers rather than the US government, STRIPS are given the same backing as other Treasury securities including Treasury bills, notes, and bonds because the Federal Reserve supervises their production.

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