O Real options embedded within a project have value. Therefore, if a project has an investment timing option (the firm can delay taking on the project), the firm can increase the project's net present value by exercising the option and simply postponing the date at which the project is taken on. O The use of modified internal rate of return gets rid of the reinvestment rate problem associated with internal rate of return, but may still lead to multiple internal rates of return. OA project's modified internal rate of return will always be less than its internal rate of return, even if the project has no intervening cash flows over the life of the project. O If a 10-year project has only a single cash outflow at the start of the project (Year 0) and a single cash inflow at the end of the project (Year 10), then it is impossible to calculate an equivalent annual annity for the project. O When we calculate a project's cash flow for a net present value analysis, it is essentially the same as the free cash flow concept discussed at the beginning of the term. That is, the project's free cash flow is equal to the operating cash flow generated by the project, less the firm's incremental investment in net operating working capital, less the firm's incremental investment in gross fixed assets.