The most difficult task in business appraisal is forecasting future economic benefits and the associated risks. This process is inherently subjective, relying heavily on professional judgment regarding future economic, industry, and company-specific conditions. Unlike other valuation tasks that are more procedural or based on historical data, forecasting requires synthesizing numerous variables into a coherent and defensible projection. Gaining agreement on these forward-looking assumptions between parties with divergent financial interests, such as a buyer and a seller, adds a layer of complexity that makes this the most challenging aspect of the valuation engagement.

B. Identification of a partial interest is a definitional step that, while important, is generally less complex than forecasting future performance and risk.

C. Selection of the enterprise value premise (e.g., going concern) is a critical decision but is typically dictated by the facts and circumstances of the engagement.

D. Estimation of invested capital is a relatively straightforward calculation based on the company's balance sheet, involving less subjectivity than forecasting.

1. NACVA. (2023). Business Valuations: Fundamentals, Techniques and Theory (FT&T). In the sections covering the Income Approach (Chapter 5), the text emphasizes that forecasting is both an "art and a science" and is subject to significant uncertainty and professional judgment, making it one of the most challenging components of a valuation.

2. Pratt, S. P., & Grabowski, R. J. (2022). Valuing a Business: The Analysis and Appraisal of Closely Held Companies (6th ed.). McGraw-Hill. Chapter 9, "Income Approach: Discounted Economic Income Method," states, "Developing the prospective financial information... is one of the most critical and difficult aspects of the valuation process." (p. 189).

3. Hitchner, J. R. (2017). Financial Valuation: Applications and Models (4th ed.). Wiley. Chapter 3, "Income Approach," details the significant professional judgment required to develop financial projections and select appropriate discount and capitalization rates, highlighting these as areas of great difficulty and potential dispute in a valuation. (pp. 85-87).