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  • With the payment function, we have to make sure all arguments are expressed in the same time interval. We normally express interest rates and the length of the loan in years, while we calculate a monthly payment. Since the interest rate is expressed in years and we want the interest rate per period, divide the interest rate by 12. Since the repayment period is expressed in years and we make 12 payments per year, we need to multiply the number of years by 12. In order for the payment amount to be positive, the amount of the loan must be expressed as a negative. Since we don’t want cell B4 to read -$9,999, we place the negative operator before the cell reference to B4 in the formula. You could also put the negative operator right after the equal sign. If you have students who are business majors, this is no different than any time value of money calculation (present value, NPV, IRR, etc.)
  • Unlike the PMT function, in this case, all three assumptions were measured in years, so there was no need to express all the terms in months. If you wanted to illustrate the power of compounding, show the value of making a $250 contribution each month rather than a $3,000 contribution each year. Over the same 40 years, with the same 7% return, the future value would be $656,203.35. While that may not have anything to do with Excel, it is a valuable lesson for the students to learn now.
  • Notice the formula bar as each argument is entered. As arguments are changed, the value that will be returned by the function changes. Have students examine that value and perform a reasonableness check before clicking the OK button.
  • Goal Seek can be a useful tool when one of our input parameters is inflexible. In the example given, we can’t afford more than a $200 monthly payment, so this command can be used to determine the most we can finance. Since the amount financed is contingent upon either the price of the car, the down payment, or the amount of the rebate, we will use Goal Seek to set one of those variables.
  • In this case, we have a maximum monthly payment of $200. We can change any one of the assumptions. For the Goal Seek command to be usable, focus on the assumptions you can realistically change. Students aren’t likely to get one of those 0% financing deals or a seven or eight year repayment period and they probably can’t negotiate the amount of the manufacturer’s rebate, so they need to be willing and able to change the purchase price of the car or the down payment.
  • This is a review of material covered in chapters 1 and 2.
  • Mixed references are most often used to create a table, where one value in a formula remains the same as the formula is copied over a column, but changes as the formula is copied down a row, and the other value in a formula does just the opposite. In the example above, when the formula in cell C6 is copied to other columns, the number of payments will always come from column B, so that column reference needs to be absolute. When it is copied to other rows, the number of payments will come from the row the formula is being copied to, so the row reference needs to be relative. The reference for the expected rate of return is just the opposite. As the formula in cell C6 is copied to other columns, the expected rate of return will reflect the column the cell is being copied to, so the column reference needs to be relative. As the cell is copied to other rows, the rate of return will always come from row 5, so the row reference needs to be absolute.
  • It is important to note that as far as Excel is concerned, a 0 is not a blank cell, so the 0 will be included in the MAX, MIN, and AVERAGE functions. If you had two ranges of four cells, one of which contained 100, 100, 100, and a blank space and the other of which contained 100, 100, 100, and 0, the AVERAGE function would return 100 for the first range and 75 for the second. This sometimes causes havoc with students and with professors who use Excel for their grade books!
  • Study Figure 4.11 in the text, which compares the effects of inserting and deleting rows with functions as opposed to formulas. When students see the #REF error message, they typically think something is wrong with the computer.
  • Students usually do pretty well with the conditional test. The most common mistake they make is entering another conditional test in the value-if-true or value-if-false argument, which returns either true or false rather than the value and often causes a circular reference.
  • In this example, I have entered the value_if_true and value_if_false as conditional tests. This seems perfectly logical because, in my mind, I am saying that if the condition is true, then cell F4 will be equal to 40 and if it is false, it will be equal to the value in cell B11. The presence of the relational operator (the equal sign) causes Excel to return either True or False, rather than the value.
  • As illustrated here, the value can be either a numeric value or a cell reference. If you were in a union environment or thought that federal employment law regarding overtime might change, you could include the overtime threshold as an assumption and refer to that cell in the formula. For values that are extremely static, such as an overtime threshold, it is more efficient, in terms of using computer resources, to enter the value as a value rather than a reference.
  • The function will look for the value in the first column of the table array, so when students are defining the table, they need to make sure the column containing the breakpoints is the first column in the table. If the cell containing the VLOOKUP function is going to be copied, the table array needs to be an absolute reference. It might be helpful to teach the students how to define a name for the table. If they name the table and use that name in the function, it will automatically be an absolute reference.
  • A common mistake is to enter the actual column containing the result as the col_index_num, rather than the index number. For example, they would enter J, since the grades are found in column J. The function looks at the column’s position within the table array, rather than the absolute column reference. If any of your students have had a programming class, they are accustomed to arrays beginning with 0. In this case, the array begins with 1; that is, the column containing the lookup values is 1, not 0.
  • There are several ways to scroll. In addition to the ways shown here, the mouse typically has some “intelligent” scrolling features. Freezing panes is helpful with large worksheets because it allows you to keep column headings or row headings visible.
  • Freezing panes keeps you from entering a score in the wrong column or giving the grade to the wrong student. Freezing panes has no effect when the worksheet is printed. Hidden rows and columns, on the other hand, are hidden when the worksheet is printed, as well as when the worksheet is viewed on a monitor.
  • This is one of the database features found in Excel. It is extremely useful. In a business environment it is used on a regular basis by those who know the feature.
  • If the column headings are in row 1 or 2 of a spreadsheet, the AutoFilter command will find them automatically. You can click anywhere in the data, choose Data, Filter, AutoFilter – and the drop down boxes will fall into place.

Exp2003 exl ppt_04 Exp2003 exl ppt_04 Presentation Transcript

  • Exploring Microsoft Excel 2003 Committed to Shaping the Next Generation of IT Experts. Chapter 4: Spreadsheets in Decision Making: What If? Robert Grauer and Maryann Barber
  • Objectives
    • Use the PMT function to calculate the payment of a car loan or mortgage.
    • Use the FV function to determine the future value of a retirement account
    • Explain how the Goal Seek command facilitates the decision-making process
    • Use mixed references to vary two parameters in a table
    • Use the AVERAGE, MAX, MIN, and COUNT functions
  • Objectives (continued)
    • Use the IF and VLOOKUP functions to implement decision making
    • Freeze, unfreeze, hide, and unhide, rows and columns in a worksheet
    • Use the AutoFilter command to display selected records in a list
    • Describe the options in the Page Setup command used with large worksheets
  • Case Study: Vacation Time
    • In this case study, students are asked to complete a worksheet that was started by someone else. The worksheet contains information about employees. They need to use date arithmetic to calculate how long an employee has been working here, use the VLOOKUP and IF functions to make determinations on how much vacation time each employee is entitled to and if he or she has any time left. After using these functions, students create some simple statistics, using built-in statistical functions.
  • Using Functions
    • Function – a predefined computational task
    • Requires arguments
      • Values the function uses to calculate answers
    • Returns a value
  • The PMT Function
    • Calculates a periodic payment, such as a car or mortgage payment
    • Based on:
      • Amount financed
      • Interest rate
      • Number of periods
  • Using the PMT function Interest rate divided by 12 Number of payments multiplied by 12 Amount financed expressed as a negative number Amount financed, interest rate, and the term, are all isolated as assumptions. One or more assumptions can be changed
  • The FV function
    • Returns the future value of a series of payments
      • For example, contributions to your 401K or IRA
    • Based on:
      • Number of periods
      • Expected rate of return
      • Amount invested each period
  • Using the FV Function Amount of contribution, rate of return, and years contributing are all expressed as assumptions
  • Inserting a Function
    • Use the Insert Function command from the Insert menu
    • Use the list box to select the name of the function
      • Functions are categorized
    • Let the Wizard help you enter the arguments
      • Point to enter cell references
      • Use the Collapse button to collapse the dialog box
  • The Function Wizard Enter arguments into text boxes Collapse button shrinks dialog box if necessary Value returned by the function (answer) is displayed
  • The Goal Seek Command
    • Allows you to set an end result and vary the inputs (assumptions) to produce that result
      • Only one input can be varied at a time
        • All other assumptions remain constant
      • For example, set a desired monthly car payment
        • Vary the amount financed
        • Interest rate and number of months remain the same
  • Using the Goal Seek Command Enter the cell containing the desired result Enter the desired value Enter the cell containing the desired result
  • Hands-on Exercise 1
    • Title of Exercise: Basic Financial Functions
    • Objective: To illustrate the PMT and FV functions; to illustrate the Goal Seek command.
      • Input file: None
      • Output file: Basic Financial Functions
  • Developing Proficiency
    • Use relative and absolute references correctly
      • Use relative cell references if the value will change when a cell is copied
      • Use absolute references if the value remains constant (typically assumptions)
    • Mixed references
      • Use when either the row or the column will change
    • Isolate your assumptions
      • Formulas in cells refer to the assumptions area, not to the actual values
  • Using Mixed References Mixed references used for number of payments, rate of return Absolute reference used for amount of contribution
  • Hands-on Exercise 2
    • Title of Exercise: Advanced Financial Functions
    • Objective: To use relative, absolute, and mixed references in conjunction with the PMT and FV functions; to practice various formatting commands.
      • Input file: None
      • Output file: Advanced Financial Functions
  • Statistical Functions
    • MAX, MIN, and AVERAGE functions
      • Return highest, lowest, and average values from an argument list
        • Argument list may include cell references, cell ranges, values, functions, or formulas
        • Cells that are empty or contain text are not included
    • COUNT and COUNTA functions
      • COUNT returns number of cells containing numeric entries or formulas that return a number
      • COUNTA also includes cells with text
  • Using Functions versus Formulas
    • In general, use functions instead of formulas
      • Functions are adjusted as rows or columns are deleted or added within the range referenced by the function
      • With formulas
        • Adding a row adjusts the cell references in the formula, but does not include the new row in the formula
        • Deleting a row causes a #REF error message
  • The IF Function
    • Enables decision making in a worksheet
    • Requires three arguments:
      • A condition
      • A value if the condition is true
      • A value if the condition is false
    • Condition must be able to be evaluated as true or false
      • Uses relational operators (=, <, etc.)
  • Using the IF Function Incorrectly Value_if_true entered as a conditional test. Function will return True or False
  • Using the IF Function Correctly Value_if_true entered as a value. Value_if_false entered as a cell reference
  • The VLOOKUP function
    • Allows Excel to look up a value in a table and return a related value
    • Requires three arguments:
      • the numeric value (or cell) to look up
      • the range of the table
      • the column number containing the value you want to return
  • Using the VLOOKUP Function This argument tells the function where to look. Absolute references used for the table Look in the second column of the table, NOT in column J Look up the value found in cell I4, in this case, the semester average
  • Working With Large Worksheets
    • Scrolling causes the screen to move horizontally or vertically as you change the active cell
      • Drag the horizontal or vertical scroll bars
      • Click above or below vertical scroll bars
      • Click to the left or right of horizontal scroll bars
    • Freezing Panes allows row and column headings to remain visible while scrolling
    • Hiding rows and columns makes rows and columns invisible on the monitor or when printed
  • Freezing Panes As you scroll back up, rows 4-8 will become visible again
  • Printing Large Worksheets
    • Page Preview command (View menu) lets you see where the page breaks are
    • Page Setup command (File menu) lets you change how the sheet prints
      • Change from portrait (8 ½ x 11) to landscape (11 x 8 ½)
      • Change margins
      • Scale the worksheet to print on one sheet
  • The AutoFilter Command
    • Allows you to display a selected set of rows within a worksheet
      • Displays rows that meet selected criteria
      • Other rows are hidden, not deleted
    • Select Filter then AutoFilter from the Data menu
    • Select criteria from the dropdown
  • Using the AutoFilter Command Click the dropdown on the Homework column, then select Poor as the criteria
  • Hands-on Exercise 3
    • Title of Exercise: The Expanded Grade Book
    • Objective: To develop the expanded grade book; to use statistical (AVERAGE, MAX, and MIN) and logical (IF and VLOOKUP functions); to demonstrate scrolling and the Freeze Panes command
      • Input file: Expanded Grade Book
      • Output file: Expanded Grade Book Solution
  • Summary
    • Financial functions (PMT and FV)
    • Goal Seek enhances decision making
    • Statistical functions (MAX, MIN, AVERAGE, COUNT, and COUNTA)
    • Decision making functions (IF, VLOOKUP, and HLOOKUP)
    • Isolate and clearly label initial assumptions
  • Summary (continued)
    • Copy using fill handle
    • Use scrolling & the Freeze Panes command to work with large worksheets
    • Page Setup controls how the worksheet prints
    • AutoFilter command displays only rows that meet certain criteria
  • End-of-chapter Exercises
    • Multiple Choice
    • Practice Exercises
      • Exercise 1 – Calculating Your Retirement
      • Exercise 2 – Alternate Grade Book
      • Exercise 3 – Expanded Payroll
      • Exercise 4 – Fuel Estimates
      • Exercise 5 – The Roth IRA
      • Exercise 6 – Celebrity Birthdays
      • Exercise 7 – The Health Club
      • Exercise 8 – File Formats and Folders
  • End-of-Chapter Exercises (continued)
    • Practice Exercises
      • Exercise 9 – Nested Ifs and Other Functions
      • Exercise 10 – Election 2000
    • Mini Cases
      • The Financial Consultant
      • Fun with the If Statement
      • The Lottery
      • A Penny a Day
      • The Rule of 72
  • Questions?