What is a cash-flow diagram used for?

• A. The energy balance of a process
• B. The flow of materials through a system
• C. The cash transactions over the life of a project
• D. The physical layout of equipment in a plant

Answer: (C)

Cash-flow diagrams visualize when dollars enter and leave a project and how large those amounts are over time. They place the initial investment as a negative cash flow at time zero, then show operating costs and revenues (or salvage value) in future periods. This timing and magnitude view makes it easy to apply the time value of money and compute metrics like net present value or internal rate of return, which are used to judge financial viability and compare options. It isn’t about energy balances, which track energy flows in a process; nor about the flow of materials through equipment; nor about the physical layout of a plant.