Imagine That Two Firms Who Burn Massive Amounts of Fossil

question 21

Multiple Choice

Imagine that two firms who burn massive amounts of fossil fuel during their daily operations are merged to create a single company. Which of these statements is accurate?

• A) Their environmental performance scores will automatically suffer because the scale of their emissions will grow
• B) The measurement of the new company's emissions intensity will be scaled by a size variable, such as units produced or sales revenue
• C) Their environmental performance may be enhanced by streamlining operations and pooling R&D insights
• D) The measurement of the new company's emissions intensity will be scaled by a size variable, such as units produced or sales revenue & Their environmental performance may be enhanced by streamlining operations and pooling R&D insights

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Definitions:

New Stock

Shares that are issued to the public for the first time through an initial public offering (IPO) or additional shares issued by a company already public.

Leveraged Buyout

The acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition.

Tax Shields

Financial techniques that reduce taxable income through deductions such as mortgage interest, depreciation, or charitable donations, effectively lowering tax liabilities.

Project Financing

A financial structure where project debt and equity used to finance the project are paid back from the cash flow generated by the project itself.