In this change management interview question, the interviewer is checking your knowledge about the important term discounted cash flows. Be succinct and deliver all pertinent concepts. Capital budgeting is an essential business approach that is widely used by businesses to study and assess the profitability of various company plans. Sir, it is a capital budgeting approach phrase. In this strategy, the predicted cash flows from an investment are discounted using an estimated rate of return. By doing so, all potential future cash flows are lowered to their actual costs, allowing management to adequately examine the actual profitability of the company proposal in evaluation.