hello I just started learning the BA II Plus Pro today, I have used scientific calculator throughout my uni years.
I don’t understand why PV have to be input as negative figure? Can someone explain to me the logic behind it?
Depends on the problem, but generally it’s because you are paying for something. If the money you receive is positive, the money you pay would have to be the opposite.
it is to indicate whether something is an inflow or an outflow. If inflows are negative, then outflows are positive.
The sign doesn’t matter, but what does matter is that it has the opposite sign of future value. It depends on what side of the transaction you’re looking at, or you can just ignore the sign altogether.
For example, if you borrow for a mortgage, you have a positive present value – you’re receiving a whole bunch of money. Your future value is 0, since all the money you get now has to be paid off by the end of the mortgage. When you calculate the payment, the calculator will display a negative value: you losing money every month.
Alternatively, you can look at the same mortgage from the perspective of the bank. They hand you lots of money, so their present value is negative. The future value is still 0, since they are eliminating their initial loss. Their payment amount is identical to yours, except theirs is positive since they’re being paid every month.
Now consider a bond example. You want to buy a bond with a face value of 1000, and it costs 900, and it pays 10 every month. The present value you input is -900 since you’re losing 900 now in exchange for the bond. The future value is the amount you get paid at the end: +1000. And in this case, since you’re receiving coupon payments over time, input your payments as +10.