Cash Flow Diagrams

Value of money in the future

Cash Flow Diagram - Loan Transaction

A loan transaction starts with a positive cash flow when the loan is received - and continuous with negative cash flows for the pay offs.

cash flow diagram

  • upward arrows - positive cash flow (receiving the loan)
  • downward arrows - negative cash flow (pay off)

The Present Value of the cash flows can be calculated by multiplying each cash flow with a Discount Rate.

Cash Flow Diagram - Investment Transaction

An investment transaction starts with a negative cash flow when the investment is done - and continuous with positive cash flows when receiving the pay backs.

cash flow diagram

  • upward arrows - positive cash flows (pay back)
  • downward arrows - negative cash flow (investing)

Related Topics

  • Economics - Engineering economics - cash flow diagrams, present value, discount rates, internal rates of return - IRR, income taxes, inflation

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