Question

can a project have negative cash flows for the first few years before having positive cash flows ?

Answer 1

Yes, it is possible to have negative cash-flows for the few first years before positive cash-flows

The following can be the possible cases:

(a) The project has a gestation period for few years. In the gestation period, the project does not produce any revenue but requires capital expenditure and costs to develop the infrastructure

(b) The project may require some time to achieve a minimum capacity utilization beyond which the project starts generating positive cash flows