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  #11  
Old 05-22-2018, 09:04 AM
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rgreenlee rgreenlee is offline
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Originally Posted by eruben1007 View Post
Why set 144 to be negative?
I believe the tvm functions as if sum(all those variables) = 0, so something has to be negative. It has been 3.25 years since I used that calculator though. Also RG<>me and a 2004 thread?
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Old 05-22-2018, 09:31 AM
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If it's a multiple choice problem, you could just plug in the values they give you and see which one works.
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Old 05-22-2018, 10:07 AM
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Originally Posted by eruben1007 View Post
Why set 144 to be negative?
To add to what rgreenlee said . . .

Keep in mind that TVM is based on cash flows between two parties. One flow is "how much now to I send to the other party now"; the other is "how much will I get back later".

You set one direction to be a "positive" cash flow; the other direction needs to be "negative".

So the sign is just an indication of which direction the money is going.
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Old 05-23-2018, 10:07 AM
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Originally Posted by Vorian Atreides View Post
To add to what rgreenlee said . . .

Keep in mind that TVM is based on cash flows between two parties. One flow is "how much now to I send to the other party now"; the other is "how much will I get back later".

You set one direction to be a "positive" cash flow; the other direction needs to be "negative".

So the sign is just an indication of which direction the money is going.
Thanks for the responses!

is the use of the calculator for this problem just a creative approach? How does the context of cash flow fit into the problem?

This is what's in my head right now:

I get a payment of 121 from a bank immediately, and 121 a year later, am I then giving 144 back to the bank at end of year two and three? if so why?
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