Re: Future Value calculation

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From: Fred Smith (fredsmith99_at_yahoo.com)
Date: 08/13/04 

Date: Thu, 12 Aug 2004 22:43:02 -0600

Hi Myrna,

You are right, I contradicted myself with my example. I realized it, as
usual, just after I hit the send button. I should have stopped at the point
where I said it really doesn't matter which way you use the signs, as long
as you're consistent.

I don't agree with Harlan that the sign convention is an "abomination". I
find it quite useful, especially when I'm dealing with PMT. With PV and FV,
the sign is simple, they just have to be the opposite of each other. With
PMT, I have to remember am I getting money (like FV), or am I putting money
in (like PV).

Excel will quite handily handle whatever signs you throw at it. You just
have to decide what system will ensure you get the right result with the
fewest number of attempts. Sticking to a particular sign convention, in my
mind, is best. 

-- 
Regards,
Fred
Please reply to newsgroup, not e-mail
"Myrna Larson" <anonymous@discussions.microsoft.com> wrote in message
news:sqnnh0500gtgoaikcnj88bkk8jegnhft8u@4ax.com...
> 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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