Re: Future Value calculation

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From: Myrna Larson (anonymous_at_discussions.microsoft.com)
Date: 08/12/04 

Date: Thu, 12 Aug 2004 16:24:53 -0500

Hi, Fred:

I'm confused by your examples. You say (ordinarily) negative is money out of
your pocket, positive is money into your pocket. That's also the way I usually
think of it, too.

But then you say if you are investing money, it's positive. Let's say we're
buying a CD at the bank. I would use a negative sign for this. I'm taking
money out of my pocket and paying it to the bank. And if I get money back from
the bank (a withdrawal), I put it in my pocket, so from the viewpoint of my
pocket, it's positive. i.e. money going TO the bank is negative, coming FROM
the bank is positive.

On Wed, 11 Aug 2004 21:51:32 -0600, "Fred Smith" <fredsmith99@yahoo.com>
wrote:

>While there is a convention for signs (-ve is money out of your pocket, +ve
>is money into your pocket), in fact it doesn't matter as long as you are
>consistent.
>
>PV is normally positive, because you've taken money out of your pocket to
>invest. Follow the same convention with PMT. If you're investing money, it's
>positive; if you're receiving the money (like your withdrawals), it's
>negative. If PV is positive, FV is negative, because the cash flow is in the
>opposite direction.

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