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 is often used for such projects along with discounted cash flow analysis.

Question

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Due to the complexity and uncertainty involved in long-term projects, it can be difficult to make accurate financial projections. As a result, subjective judgment is often utilized along with discounted cash flow analysis to estimate revenues and costs.

It Is Extremely Difficult to Estimate the Revenues and Costs