When inputting information into a financial calculator,one of the cash flow components must be negative since the calculator is set up to solve an equation equal to zero.

Question

Quizplus · Accepted Answer

This is because the financial calculator uses the concept of Net Present Value (NPV) or Internal Rate of Return (IRR) which involves adding up all future cash flows and discounting them back to the present value. In order to do this, one of the cash flow components must be negative to account for any outflows or expenses. Therefore, the equation being solved will be equal to zero after adding up all the discounted cash flows, including the negative one.

When Inputting Information into a Financial Calculator,one of the Cash