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  1. #1
    4 Star Lounger
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    What is the logic behind the negative sign in the results of the FV function? Example: $1000 invested for 5 years at 4% gives me -$1217.

  2. #2
    Plutonium Lounger
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    Amounts received and amounts paid always have opposite signs. This is done so that you can simply add all amounts, whether they are received or paid.
    For example, if you start with a balance of $0, receive $100 and spend $70, the latter would be entered as -$70. To get the end balance, simply add $0, $100 and -$70 together to get $30.

    In this example, you might interpret the $1000 as an amount received by the bank (positive) and the $1217 as an amount paid by the bank (negative).

    If you specify -$1000 as the invested amount, the return would be +$1217. This time you interpret the amounts from your viewpoint: paid $1000 (negative), received $1217 (positive).

  3. #3
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    [quote name='gsmith' post='767244' date='25-Mar-2009 20:55']What is the logic behind the negative sign in the results of the FV function? Example: $1000 invested for 5 years at 4% gives me -$1217.[/quote]

    Generally, in financial calculation
    PV = -1000
    n = 5
    i = 4
    FV = 1217

    this is because today you invest 1000 meaning that you paid out the monies and will receive $1217 at the rate of 4%
    at the end of 5 years period

    In your case, you may take the opposite side of the deal like Hans have mentioned, the bank received $1000 today
    and will pay you $1217 at the rate 4% for 5 years period

    HTH
    Hope this is helpful

    francis, <img src=/S/cheers.gif border=0 alt=cheers width=30 height=16>

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