Cash flow notation PDF Print E-mail
Written by Travis Morien   

If you ever use a financial calculator or spreadsheet to work out PVs and FVs and all the rest, you need to be consistent in the way you enter data.

Incoming money is always expressed as a positive. Outgoing money as a negative. So when you are doing a PV problem on a financial calculator, if you want to invest $1,000 today and $500 a year for 10 years at 8%, I get out my financial calculator, press -$1,000 PV -$500 PMT 8 i 10 n FV.

Then the calculator spits out $9,402.21 You had to pay out the $1,000 and the $500 payments, so they are negatives. You get back $9,402.21 at the end so this comes out as a positive.

It doesn't particularly matter if you accidentally entered the PV and the PMTs as positives, but then the FV would come back as a negative, you'll get the same numbers but the signs are reversed. The PV, PMT and FV can't all have the same sign, that won't compute. At least one of these must be the opposite sign of the other two.

 
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