MAV 2009 Exam 2 Business Maths HELP

[sam.utute]

Hey everyone.
I'm stuck on Q4 in the exam.

Question 4:
With the $8000 from the sale of the bus after it is scrapped, a scholarship fund is to be set up. A scholarship
amount of $1200 is to be paid annually from the $8000 and will be set up with the local bank offering a
guaranteed interest rate of 4%pa compounded annually. For how many years will the scholarship be able to be
granted before the funds are exhausted?

My answer:                  Their answer:
Finance Solver             Finance Solver
N=?                            N=?
I%=4                         I%=4
PV=-8000                   PV=-8000
PMT=1200                  PMT=-1200
FV=0                          FV=0
P/Y=1                        P/Y=1
C/Y=1                        C/Y=1

N=7.90793699            N=-6.027141249

Why did they put the payment as -1200?

Thanks ,
Sam

[TyErd]

because the payment of 1200 is going out of you pocket. Any money going into your pocket will be positive and any money going out of your pocket is negative.

[sam.utute]

because the payment of 1200 is going out of you pocket. Any money going into your pocket will be positive and any money going out of your pocket is negative.

Hmmmm...
I though as its a scholarship, the money would be coming to you. I guess it means that the scholarship funds are being paid from your account to someone, so essentially, its like a "payment to the bank".
Thanks TyErd

[scottlyons]

I am pretty sure that what you have done is correct. They have done it wrong. No matter what the signs are, the payment sign is always opposite to the PV sign. Besides, if you do it the long and slow way, and do 8000 x 1.04 -1200, etc etc, you will notice that you count 7 "1200"s (scholarships awarded) before the amount of money comes to 0.

[vexx]

I just did this paper, and i agree with you, since you are giving 8000 to the bank so -8000 in formula, and then they give you 1200 out of that so its positive. you cant have a negative N anyway, so we are right at 7.9 pretty sure, unless there is something odd going out ha:)