Normal investment

The normal investment is understood to mean an investment that only includes an investment payment at the beginning. Afterwards, only repayments are made.

Definition / explanation

The payment of the investment amount takes place only once with the normal investment or takes place over a fixed period of time. All subsequent periods only include the repayments.

The cash flow only changes direction once (mathematically speaking, only the sign). In comparison, in the case of non-normal investments, the cash flow changes direction several times.

It can happen that a normal investment also requires only one single payment at the beginning. This means that further future payouts are excluded.

The special thing about a normal investment is its clear internal rate of return.

Summary

  • one-time payment at the beginning of the investment
  • the flow of payments changes direction only once
  • Feature: Internal rate of return is clear
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