In capital budgeting, one of the most common scenario approaches is to estimate the NPVs associated with pessimistic (worst), most likely (expected), and optimistic (best) estimates of cash inflow.

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This statement is true. The scenario approach is a common method of estimating the net present value (NPV) of a capital budgeting project, and it involves evaluating the project's financial performance under different scenarios or estimates of future cash inflows. These scenarios typically include a pessimistic (worst-case), most likely (expected), and optimistic (best-case) estimate to account for a range of possible outcomes.

In Capital Budgeting, One of the Most Common Scenario Approaches