A Particular Project Might Have Very Uncertain Cash Flows, Hence

question 18

True/False

A particular project might have very uncertain cash flows, hence a highly uncertain NPV and IRR, yet it may not have high market risk.

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Definitions:

Marginal Product

The boost in production resulting from one more unit of input.

Total Product Curve

A graphical representation showing how the total quantity of output produced by a firm varies with the quantity of a variable input, keeping all other inputs constant.

Average Product

The output per unit of input, such as the quantity of goods produced per unit of labor.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may decrease.