Simple investment

economic-dictionary

Simple investment is any one that has the following structure: negative initial outlay and positive net cash flows. The opposite case is known as a simple financing project.

Simple investments always have a single positive IRR. All simple investments are pure investments.

On the contrary, when an investment has some of its negative net cash flows in addition to the initial one, it is said that it is a non-simple investment.

Simple investment example

A simple investment can be, for example, deliver 1000 euros at the beginning of the period, the first year receive an interest of 200 euros, the following year another 200 euros and the last year receive 800 euros. The cash flows would be:

-1000/200/200/800

Investment project Investment cash flow

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