Capital Budgeting Steps 1)Evaluate Cash Flows Look at all incremental cash flows occurring as a result of the project Initial outlay Differential cash flows over the life of the project (also referred to as annual cash flows). Terminal cash flowsCapital Budgeting Steps 1) Evaluate Cash Flows Look at all incremental cash flows occurring as a result of the project. • Initial outlay • Differential Cash Flows over the life of the project (also referred to as annual cash flows). • Terminal Cash Flows