CONVENTIONAL CASH FLOW

Sets of inward and outward cash flows through time where there is only one change in the cash flow direction. In a project or investment, it is normally structured as a preliminary outlay followed by numerous inflows within a time period. In mathematical notation, it is shown as -, +, +, +, +, +, indicating an initial outflow over a time period, and inflows in the next five period. This is specifically used in discounted cash flow analysis. This flow has one internal rate of return, making it much easier to choose among many projects or investments.