PV(), FV() confused by sign expected

[Karl]

given

annual rate = 10%
periodic rate = 0.8333...%
nper=12
pv=100,000
pmt=100
type=0

FV() returns -$111,727.86

Why a negative value? If I have a balance of a positive $100, 000 and add
to it $100 each month, I would expect to have a positive $111,727.86

On the other hand, if I assume the same facts as above except change the
payment to a -100.00

then Excel's FV() returns -$109,214.75

I also don't understand this either, in that I start with a balance of
$100,000 and I believe I'm subtracting (-100.00) each month. Why's the
balance not 98,800.00 plus the impact of interest?

So my question is, how do I interpret the sign when using the financial
functions.

TIA.

 

[Bernard Liengme]

Hi Karl,
With financial calculations you must remember that two parties are always
involved: a lender and a borrower. When you take out a loan clearly you are
the borrower and the bank is the lender. Not so clear is the case of a
savings: you must treat the bank as the borrower and you are the lender.
Normally we call ourselves depositors when we put money in the bank.

Most people use + for money flowing in and - for money out.

If you use +100,000 and +100 for PV and PMT then "you" are the bank (money
flows to you). At the end of the NPER periods, the you (the bank) owes the
depositor 111,727.86. The sign from the FV function is negative since the
bank must pay up!

If you use -100,000 and -100 for PV and PMT, then "you" are the depositor -
money flows from you. At the end, FV is positive since money flows back to
you.

best wishes

Bernard