Discounted cash flow techniques are used to evaluate investment projects by estimating relevant cash flows over time and discounting them to calculate net present value (NPV). NPV is the primary criterion for accepting or rejecting projects and considers the timing of all cash flows. When capital is limited, mutually exclusive projects must be ranked according to NPV to allocate funds to the most valuable opportunities. Accurately determining relevant cash flows requires understanding how items like depreciation, working capital, taxes, and capacity utilization affect cash flows over time.