Non-Normal Cash Flow
Non-normal cash flow stream is a pattern of cash flows in which the direction of cash flows changes more than once. It is also termed as unconventional cash flow.
Non-normal cash flow stream leads to what is called multiple-IRR problem.
Alpha Beta is analyzing cash flows stream of Project Gamma which is given below:
The project has non-normal cash flow stream because cash flows change direction thrice (in Year 1, 2 & 3).
Written by Obaidullah Jan, ACA, CFA