# Cash Flow Diagrams

## The future value of money.

### 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.

- 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.

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