slides on spreadsheet decision

1. SPREADSHEETS IN DECISION
MAKING: WHAT IF?
CHAPTER 4
BCOMP1101 • COMPUTER APPLICATION FOR BUSINESS
HEMAVATHI
FACULTY OF BUSINESS
MANAGEMENT & GLOBALIZATION

2. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 2
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
• Use mixed references to vary two parameters in
a table
• Use the COUNT functions

3. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 3
Objectives
• Use the IF functions to implement decision
making

4. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 4
Topics covered
• Using Functions
• PMT Function
• FV Function
• Function Wizard
• IF Function

5. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 5
Case Study: Bill’s Autos
In this case study, students create a flexible
car payment calculator. They use the PMT
function to determine the monthly payment.
They then use mixed references to create a
table showing the amount of the payment,
given different amounts financed and
interest rates.

6. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 6
Using Functions
• Function – a predefined computational
task
• Requires arguments
– Values the function uses to calculate answers
• Returns a value

7. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 7
The PMT Function
• Calculates a periodic payment, such as
a car or mortgage payment
• Based on:
– Amount financed
– Interest rate
– Number of periods

8. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 8
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

9. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 9
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

10. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 10
Using the FV Function
Amount of contribution, rate
of return, and years
contributing are all
expressed as assumptions

11. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 11
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

12. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 12
The Function Wizard
Enter arguments into
text boxes
Collapse button
shrinks dialog box
if necessary
Value returned by the
function (answer) is
displayed

13. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 13
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

14. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 14
Using Mixed References
Mixed references used
for number of payments,
rate of return
Absolute reference
used for amount of
contribution

15. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 15
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

16. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 16
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

17. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 17
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

18. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 18
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.)

19. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 19
Using the IF Function Incorrectly
Value_if_true entered as a
conditional test. Function will
return True or False

20. BCOMP1101 COMPUTER APPLICATION FOR BUSINESS 20
Using the IF Function Correctly
Value_if_true entered as
a value. Value_if_false
entered as a cell
reference