It is generally assumed that all the future cashflows are known with certainty,but future cash flows are oftenuncertain or difficult to estimate.
A number of techniques are available forhandling this complication much of them are tootechnical involving computer simulations andadvanced mathematical skills
Consider the case of investments in automatedequipment.Suppose:discount rate = 12%no. of years =10 andthe discounted cash flow analysis of thetangible costs and benefits shows a negative net present value of $226,000.In this case, the amount of additional cash flow needed to make the project financially attractivecan be computed as follows:
Net present value excluding the intangible benefits$(226,0 00)Present value factor for an annuity at 12% for 10 years( Future Value and Present Value)5.650Negative net present value = $226,000 / Present value factor (5.650)= $40,000