1. Concepts used in cash flow estimation and risk analysis Aa Aa You can come across different situations in your life where the concepts from capital budgeting will help you in evaluating the situation and making calculated decisions. Consider the following situation The following table contains five definitions or concepts. Identify the term that best corresponds to the concept or definition given Concept or Definition Term The risk of a project without factoring in the impact of diversification An example of externality that can have a negative effect on a firm A risk analysis technique that measures changes in the internal rate of return (IRR) and net present value (NPV) as individual variables are changed The cash flow at the end of the life of the project Creates value for a company because it gives the company the right but not the obligation to take future action to increase its cash flows