DEFINITION of 'Conventional Cash Flow'
A series of inward and outward cash flows over time in which there is only one change in the cash flow direction. A conventional cash flow for a project or investment is typically structured as an initial outlay or outflow, followed by a number of inflows over a period of time. In terms of mathematical notation, this would be shown as , +, +, +, +, +, denoting an initial outflow at time period 0, and inflows over the next five periods.
The term is particularly used in discounted cash flow (DCF) analysis. A conventional cash flow would have only one internal rate of return (IRR), making it a relatively easy task to choose among several projects or investments with such cash flows.
INVESTOPEDIA EXPLAINS 'Conventional Cash Flow'
A mortgage is a good example of a typical conventional cash flow. For example, a financial institution lends $300,000 to a homeowner or real estate investor at a fixed interest rate of 5% for 30 years. The lender then receives approximately $1,610 per month (or $19,325 annually) from the borrower towards mortgage principal repayment and interest. If annual cash flows are denoted by mathematical signs from the lender's point of view, this would appear as an initial , followed by + signs for the next 30 periods.

Net Present Value  NPV
The difference between the present value of cash inflows and ... 
Unconventional Cash Flow
A series of inward and outward cash flows over time in which ... 
Internal Rate Of Return  IRR
The discount rate often used in capital budgeting that makes ... 
Discounted Cash Flow  DCF
A valuation method used to estimate the attractiveness of an ... 
Cash Flow
1. A revenue or expense stream that changes a cash account over ... 
Capital Budgeting
The process in which a business determines whether projects such ...

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