Business people point out that the documentation for capital budgeting proposals is often quite

impressive. Cash flows are projected down to the last thousand dollars (or even the last dollar) for

each year (or even each month). Opportunity costs and side effects are handled quite properly.

When a high net present value appears at the bottom, one's temptation is to say yes immediately.

Nevertheless, the projected cash flow often goes unmet in practice, and the firm ends up with a

money loser. Explain how can the firm get the net present value technique to live up to its

potential and before actual funding, how one can check out the project's underlying assumptions

about revenues and costs?