Read the Following Scenario and Answer the Questions Below

question 52

Multiple Choice

Read the following scenario and answer the questions below.
The United States consumes 21% of the world's petroleum. Most is used for transportation, and most of it is imported. In 1992, after the first Gulf War, the federal government passed the Energy Policy Act, whose goal was to replace transportation- related petroleum with alternative fuels. Biodiesel made from vegetable oil or animal fat is an economical
alternative to petroleum-based fuels. It is safe, biodegradable, nontoxic, and has the highest energy balance of any liquid fuel. Unlike unrefined oils that can be burned directly as fuels, biodiesel can be used in conventional diesel engines without engine modification. It reduces wear without compromising performance, due to its high lubricity. It is renewable and emits far less air pollution when combusted as compared to petrodiesel. The raw material used to produce biodiesel exists in billions of gallons of vegetable oil used by restaurants each year, as well as in crops. Although biodiesel burns well in pure form (B100) , commonly it is blended with petrodiesel in mixtures such as B20 and B5, which reduce toxic air pollution proportional to their biodiesel content. Biodiesel is currently available at over 600 filling stations nationwide. Demand is increasing due to federal and state tax incentives as well as the increased price and decreased availability of petrodiesel. More than 600 domestic fleets use biodiesel, including the military, NASA, Yellowstone National Park, and local governments. Many school districts use biodiesel-powered school buses. Musicians Neil Young, Bonnie Raitt, and Willie Nelson fuel their tour buses with biodiesel. Nelson, a lifelong supporter of American farmers, who benefit when their crops are used for fuel, sells his own brand, BioWillie Biodiesel, at many truck stops. Because biodiesel can be manufactured locally, fuel transportation costs are low, and dependence on foreign petroleum and the need for domestic oil exploration and development of sensitive wildlife areas, such as the Arctic National Wildlife Refuge, can be reduced when biodiesel is used as an alternative fuel.
There is concern, however, that biodiesel from crops may not be sustainable in the long term. Crops which are potentially food for humans, such as rapeseed and soy, affect the price of foods and also require land, pesticides, fertilizers and irrigation which may contribute to environmental degradation and stress on already limited resources.
-As a fuel, biodiesel ______________

• A)has low lubricity
• B)has been met with considerable resistance by American farmers
• C)is less efficient than petrodiesel because it has a low energy yield
• D)is a beneficial alternative for buses and trucks
• E)requires moderate engine retrofitting prior to use

Grasp the implications of changes in the capital structure on WACC and firm valuation.

Comprehend the factors influencing the cost of equity and debt in a firm's capital structure.

Understand how different financing sources affect a firm’s overall cost of capital.

Learn how the project's risk level influences its required rate of return.

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Definitions:

Psychological Phenomenon

A broad term for any mental process or behavior that can be observed or experienced.

Stimuli

External factors or events that provoke a response or reaction from a biological organism.

Memories Distorted

A phenomenon where recall of memories is inaccurately reconstructed or biased, often influenced by new information, beliefs, or suggestions.

Mnemonic

A technique used to assist in remembering information, typically involving patterns, phrases, or associations.