Question

When entering variables in a spreadsheet function (or in a financial calculator) the "sign convention" can be critical to achieving a correct answer. The sign convention says that outflows are negative values; inflows are positive values. For which variables is this a consideration?

Answer 1

Answer:

• Payment

• Present value

• Future value

Explanation:

The payment function can be used to determine the periodic repayment of loans or any amount which is to be invested at io as to reach targeted amounts in future. The formula for a payment is given as:=PMT (rate, nper, pv, [fv], [type])

The Present value can be defined as a financial function in excel which used in determining the value of future cash flows relating to today's terms. That is, how much amounts which is receivable in the future is available today.The formulas for present value is given as:=PV(rate,nper,pmt,(fv),type))

The future value can be used when determining how much a certain amount or investment will be worth at future time. The formula fir calculating future value is FV A = A * {(1 + r)n - 1} / r.

Answer 2

Answer: Cash flow variables.

Explanation:When entering variables in a spreadsheet function or in a financial modelling, sign convention is applied appropriately.

Sign convention indicates whether an amount is a cash inflow or cash outflow. Mostly, cash outflows are represented by a negative sign while cash inflows are represented by a positive sign.

Furthermore, in accounting, profit and loss items are distinguished by using positive signs for revenue or income items while negative signs relate to the cost or expense items. Also, in Balance Sheet items, assets and equity are assigned positive signs while negative signs are used for liabilities.

Furthermore, cash flow sign convention is applied appropriately to keep the direction of the Cash flow straight. Hence, cash inflows are entered as positive numbers and cash outflows are entered as negative numbers.