It is extremely difficult to estimate the revenues and costs associated with large,complex projects that take several years to develop.This is why subjective judgment instead of a discounted cash flow analysis is recommended for such projects.

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Discounted cash flow analysis is a fundamental financial tool used to estimate the value of a project by forecasting the cash flows it will generate in the future and discounting them back to their present value. Despite the challenges and uncertainties in estimating revenues and costs for large, complex projects, this method incorporates risk assessments and allows for a more objective and structured approach to evaluating long-term projects compared to relying solely on subjective judgment.

It Is Extremely Difficult to Estimate the Revenues and Costs