Discuss the investment timing option

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Question: Define each of the following terms:

a. Cash flow; accounting income

b. Incremental cash flow; sunk cost; opportunity cost

c. Net operating working capital changes; salvage value

d. Real rate of return, rr, versus nominal rate of return,

e. Sensitivity analysis; scenario analysis; Monte Carlo simulation analysis

f. Risk-adjusted discount rate; project cost of capital

g. Real options; managerial options; strategic options; embedded options

h. Investment timing option; growth option; abandonment option; flexibility option.

Reference no: EM131525186

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