Financial calculations, starting excel. Slide to accompany tutorial class

1. ECO118
Introductio
Working wit
Data are en
by using fu
called cell. Y
letter A,B,C
be entered
cell A4. Afte
press “En
rectangle
example to
numbers a
and also ref
sums numb
and B3. If y
automatical
with B2 or
Excel are +
division, ^ p
It is conven
copy formul
(Ctrl-C,Ctrl-
cursor when
cell B4 to a
two cells ab
uses absolu
example, fo
sums cells
$ before row
or entire ad
example, w
column E, o
on to MS Exc
th cells and e
ntered directly
unctions. Ea
You can iden
C… and by its
starting wi
er you enter f
ter” key t
moves do
cell A5. You
as function
ferences to c
bers entered
you change v
lly updates c
B3. Most c
+ sum, - su
power (e.g. =
nient to copy
a from cell B
-V) and you c
n selected c
a new cell C4
bove (now th
ute and relat
ormula enter
D2 and D3
w or column
dress - abso
when copie
one argumen
cel
entering infor
y into cells w
ch of the ite
ntify each cel
s row 1,2,3…
th “=”, see
formula and
the cursor
own – in
u can enter
arguments
cells. Here fo
into two ce
value of cell B
cells, which c
common use
btraction, *
2^8).
y formulas to
B4 to C4 you
can also drag
cell B4 to C4
4, it will still
hey are C2
tive referenc
red into sell
3. When us
, it fixes this
olute address
ed formula
nt got fixed to
rmation
with keyboard
ems in table
ls by its colu
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ormula in cell
ells above –
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ontain formu
ed operators
multiplication
o other cells.
can copy/pa
g and drop w
4. When cop
refer to sum
and C3). Ex
ces to cells.
l “D4” =D2+
sing dollar s
s row or colu
s of the cell.
=D2+$D$3
o cell D3 and
1
Tutorial 3
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have to repe
ument values
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selecting fu
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ther examp
uments given
vious page).
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his function
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D3 and syntax
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eat the same
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Here, =SUM
nd C3. Anoth
is to select a
in cell D5, it
x is =SUM(D
March 30, 201
.slideshare.ne
nomics and
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e formula wi
en you draw t
atedly, when
.
efined func
can be enter
ing in functio
the ribbon.
h changes ac
ect the cell y
how to find s
l and enter d
ect on th
elect SQRT.
arguments
values are
s are SU
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of digits to ro
on SUM, wh
ts (refer to
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her way to w
an area of th
is the area fr
D2:D3).
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Business
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you select
ctions for
red directly
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Ribbon is
ccording to
you want to
square root
directly into
he ribbon
Dialog box
or select
e entered.
UM(function
) absolute
ound up to)
hich sums
picture on
lows us to
write syntax
he table. In
rom cell D2
iede
rt

2. NPV
Ca
valu
rate
valu
PMT
inter
FV(
perio
PV(
a se
inter
num
paym
pv
fv
Type
Prac
1.
2.
3.
4.
ECO118
Drawing the
Here you ca
area you wa
chart you w
Financial fu
V( rate, value
lculates the
es) and inco
e1, value2, …
T( interest_r
rest rate and
interest_ra
odic, constan
rate, nper, p
eries of future
rest_rate
mber_paymen
ment
e
ctice of using
Two projects
Years
Project A
Project B
a. Determ
b. If the e
c. Determ
Jing decided
down payme
loan amortiz
For each mo
Calculate tot
What is the p
if Jing wants
e graphs
an find usefu
ant to chart,
want to use.
nctions in Ex
e1, [value2]
net present v
ome (positive
The r
… Paym
rate, numbe
d a constant p
te, number_
nt payments
pmt, fv, type
e payments i
interes
nts numbe
amoun
optiona
future v
optiona
the per
g Excel
s have follow
Now
-1000
-2000
mine NPV of
expected retu
mine IRR of e
d to buy new
ent of 200,00
zation schedu
onth show m
tal sum of m
price Jing wa
s to have 9%
ul section 2.8
then go to I
xcel
, ... )
value of an i
e values).
rate for disco
ments
er_payments
payment sch
_payments,
and a const
e) Returns
s worth now
t rate for the
er of payment
nt of the paym
al. It is the pr
value, or a ca
al variable an
riod. (default
wing cash flow
1
st
year
0
0
each project
urn rate incre
each project.
3 room apar
00 RMB and
ule using two
onthly loan b
onthly intere
ants to sell th
% return on h
8 from the b
Insert/Bar/ a
nvestment b
ount over the
s, pv, fv, Typ
hedule.
payment, p
ant interest r
the present
investment.
ts for the ann
ment made e
resent value
ash balance
nd indicates
), 1 Payment
ws
2
nd
year
1000
1000
t if required r
ease to 12%,
rtment in are
the rest she
o methods: a
balance, inte
est payments
his apartmen
er capital.
2
book, p92. Se
nd select typ
by using a dis
e length of on
pe ) Function
pv, Type ) R
rate.
value of an i
nuity
each period
of the payme
you want to
when the pa
ts are due at
3
rd
year
1000
0
return rate is
, which proje
ea west of Jin
will borrow f
a. annuity, b.
rest paymen
s, sum of nom
nt after a. 5 y
Math
elect
pe of
scount rate a
ne period
n returns the
Returns the
nvestment. T
ents. If omitt
attain after t
ayments are
t the beginni
4
th
year
-1000
0
6.5%. Which
ect is better n
nji lake, which
from bank at
fixed princip
nt, loan nomi
minal repaym
years, b. 10
hs for Econ
and a series
e payment am
future value
The present
ted, PV assu
the last paym
due: 0 Paym
ng of the per
5
th
year
2000
0
h project will
now ? Why ?
h cost 1,000
the rate 7.5%
pal loan if inte
nal repayme
ments and su
0 years,
nomics and
of future pay
mount for a l
e of an inves
value is the
med to be 0
ment is made
ments are due
riod.
6
th
year
1000
5000
you choos
,000 RMB. S
% for 25 yea
erest calcula
ent and actua
um of total pa
Business
yments (neg
oan based o
stment base
total amount
.
e.
e at the end
r
se ?
She will make
rs. Make mo
ated every mo
al payment.
ayments.
ative
on an
ed on
t that
of
e first
onthly
onth.