Define Learning Curve, Experience Curve, and Scale Curve

question 4

Essay

Define learning curve, experience curve, and scale curve.Compare them with each other.

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Definitions:

Abnormal Earnings Approach

A valuation method that estimates a company's value based on the prediction of future abnormal earnings, defined as earnings in excess of a normal return on investment.

Free Cash Flow Approach

A valuation method focusing on the cash flows that a company can generate after accounting for capital expenditures required to maintain or expand the asset base.

Return On Assets

A financial ratio indicating the profitability of a company relative to its total assets, measuring how efficiently a company uses its assets to generate profit.

Cost Of Equity Capital

The return that investors expect for investing in a company's equity, taking into account the perceived risk of the investment.