Estimating project cash flows is generally the most important, but also the most difficult, step in the capital budgeting process.Methodology, such as the use of NPV versus IRR, is important, but less so than obtaining a reasonably accurate estimate of projects' cash flows.

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Estimating project cash flows is crucial for capital budgeting decisions and is often challenging. While methodology (such as NPV versus IRR) is important, it is secondary to the accuracy of the cash flow estimates.

Estimating Project Cash Flows Is Generally the Most Important, but Also