On Jun 8, 8:47 am, Thomas Hastings <Thomas
wrote:
Can you explain to me, however, why the third argument
in this function has to be entered as a negative number?

Inflows and outflows must have opposite signs. But whether you use
plus for in and minus for out, or vice versa, is a matter of taste and
sometimes context.

Most people use plus for inflows and minus for outflows. Hopefully
that does not seem "highly counter-intuitive" to you. But note that
in that case, lenders and borrowers, for example, would choose
different signs.

I usually assign plus and minus so that the Excel function returns a
non-negative value. (Except when my spreadsheet design reflects
positive and negative values.) So I would write the functions the
same way whether I am a lender or borrower. But I still must be
consistent with respect to the sign of inflows and outflows.

There must be a finance-related reason

It is really more of an algebraic reason, and now a computer
programming reason. I have never heard a financial person speak of a
loan as -$100,000 ;-.

(A bookkeeper might. But again, whether it is a negative or positive
value depends on the type of the account.)

but I'm using this formula to
calculate an average GDP growth rate over a period of time, and it's highly
counter-intuitive (and therefore hard to teach) that one needs to make the
GDP in the base year negative.

Think of it this way: you are "paying" (investing) the present value
and "receiving" (growing to) the future value. Thus, PV can be
thought of as an outflow, and FV can be thought of as an inflow.