Why is it necessary to use a negative present value when solving for N (the number of payments) or I/Y (the rate of return)? Similarly, why does the answer have a negative sign if a positive payments were used when solving for a future value on a calculator?
Answers:
the PV represents the base amount that you will invest to get the future value. Therefore, your cashflow is negative (investment out), and you have to use a negative PV figure.
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