Introduction to

Microsoft Excel
Business Computer Applications
 What is it?: Spreadsheets Basics
• Spreadsheet is a computerized ledger
• Divided into Rows and Columns
• Excel is a “spreadsheet” which holds different kinds
of information
• It performs calculations with mathematical and
statistical functions
• It presents your information in a variety of ways, with
visually interesting charts and graphs
• Constants - entries that do not change
• Formulas - combination of constants and functions
• Spreadsheet is generic term; Worksheet is an Excel
term
• Workbook contains one or more worksheets
Why to Study it?
Why to Study it?
Copying formulas does not always work

This formula calculates first-quarter sales as a percentage of total year sales.

Not surprisingly, it divides the number in cell B4 ($1,000) by the number in cell F4 ($4,100).
However, when you pull the extension handle to copy the formula for Quarters 2,3, and 4,
you don’t get the results you want. Press the Page Down key several times to see what
happens.

#DIV/0! means Excel is trying to tell you that you have asked it to divide by 0 -- an operation
for which there is no answer. Why is this happening?
 Using Functions in Excel

• Use spreadsheets in decision making; use Goal Seek

and Scenario Manager to evaluate multiple conditions
• Use financial functions (PMT, etc.)
• Use fill handle and AutoFill capability
• Use pointing to create a formula
• Statistical Functions — MAX, MIN, AVERAGE, COUNT
• Use functions over arithmetic expressions
• Decision making functions (IF and VLOOKUP (vertical
lookup))
 Excel Built-In Functions

SUM
AVERAGE
COUNT
COUNTIF
 SUM(number1, number 2,…)

• Example
=SUM(3, 2) equals 5

• If cells A2:E2 contain 5, 15, 30, 40, and 50:

=SUM(A2:C2) equals 50 =SUM(B2:E2, 15) equals 150
 AVERAGE(number 1, number 2,…)

• Examples

If A1:A5 is named Scores and contains the numbers

10, 7, 9, 27, and 2, then:

=AVERAGE(A1:A5) equals 11
=AVERAGE(Scores) equals 11
=SUM(A1:A5)/COUNT(A1:A5) equals 11
 COUNTIF(range,criteria)

Counts the number of cells within a range that meet the

given criteria.

Suppose A3:A6 contain "apples", "oranges", "peaches",

"apples", respectively:

COUNTIF(A3:A6,"apples") equals 2

Suppose B3:B6 contain 32, 54, 75, 86, respectively:

COUNTIF(B3:B6,">55") equals 2
 VLOOKUP Function

• Searches for a value in the leftmost column of a table,

and then returns a value in the same row from a
column you specify in the table. Use VLOOKUP
instead of HLOOKUP when your comparison values
are located in a column to the left of the data you want
to find.

Syntax:
=VLOOKUP(lookup_value,table_array,
col_index_num,range_lookup)

– If range_lookup is TRUE, the values in the first column of

table_array must be placed in ascending order: ..., -2, -1, 0, 1,
2, ..., A-Z, FALSE, TRUE; otherwise VLOOKUP may not give
the correct value. If range_lookup is FALSE, table_array does
not need to be sorted.
 VLOOKUP Function (cont’d)
• Example:

On the preceding worksheet, where the range A4:C12 is named

Range:

– VLOOKUP(1,Range,2) equals 2.17

– VLOOKUP(1,Range,3,TRUE) equals 100
– VLOOKUP(.746,Range,3,FALSE) equals 200
– VLOOKUP(0.1,Range,2,TRUE) equals #N/A, because 0.1 is less than the
smallest value in column A
– VLOOKUP(2,Range,2,TRUE) equals 1.71
Open the Insert Function dialog box

• To get help from Excel to insert a function, first click

the cell in which you wish to insert the function.

• Click the Insert Function button. This action will open

the Insert Function dialog box.

• If you do not see the Insert Function button, you may

need to select the appropriate toolbar or add the
button to an existing toolbar.
 Examine the Insert Function
dialog box

This dialog box appears when you click the Insert Function
button. It can assist you in defining your function.
 Circular reference
Situation when some parameter in the formula refers to
the formula itself

For example, in cell C5 the following formula is entered:

VLOOKUP(C5, F2:G15, 2, TRUE)

The address C5 refers to the formula itself.

In this case it is a wrong way of writing the formula.

In some cases circular references may be used

for creating recursive (recurrent) functions.
Financial Function descriptions

This chart shows some commonly used financial functions

and a description of what they do.
 Excel's financial functions

• Financial functions are very useful to calculate information about

loans.

• Common functions are FV, IPMT, PMT, PPMT and PV.

• All these financial functions will use similar arguments that differ
based upon which function you are using.

– Think of the arguments as members of an equation

– The arguments represent the values of the equation that are known
and the function provides the solution for a single variable, or
unknown, value
 Use the financial functions

• The FV function calculates the future value of an investment

based on periodic, constant payments and a constant interest
rate per period.

• The IPMT function provides the interest payment portion of the

overall periodic loan payment.

• The PMT function calculates the entire periodic payment of the

loan.

• The PPMT function calculates just the principal payment portion

of the overall periodic payment.

• The PV function calculates the present value of an investment.

 Use the financial functions (cont’d)

• NPER Determines the number of payments needed for an

investment to grow or pay back a loan

• RATE Determines the effective interest rate

Use the Insert Function dialog box to enter
function arguments

This figure depicts how you would enter argument values for
the PMT function using the Insert Function dialog box.
 Annuity - Dictionary Definition

• An annual allowance or income; also, the right to

receive such an allowance or the duty of paying it.

(First definition in Britannica World Language edition of Funk & Wagnalls

Standard Dictionary, 1966)

• We allow the payments to be more frequent than yearly

 Loans and annuities

• A typical loan is an annuity: Why? The borrower

promises to pay a fixed amount every period.

• When we retire we want to set up a pension. We give

a bank some money. In return the bank promises to
pay us a fixed payment every month for a given
number of years. We can treat this as a loan:
– We loaned the bank the money.
– The bank promises to pay us back with a regular payment.
 Simple and Compound Interest

• Simple interest: Interest is not paid on interest

• Compound interest: Interest is paid on interest

• Compounding per year: Number of times interest is

paid or charged each year
 Example of savings account

Initial amt $2,000 Rate 10% Years 8

Simple interest Compound interest
Year Interest Balance Interest Balance
0 $2,000 $2,000
1 $200 $2,200 $200 $2,200
2 $200 $2,400 $220 $2,420
3 $200 $2,600 $242 $2,662
4 $200 $2,800 $266 $2,928
5 $200 $3,000 $293 $3,221
6 $200 $3,200 $322 $3,543
7 $200 $3,400 $354 $3,897
8 $200 $3,600 $390 $4,287
 Example of loan

You borrow $2000 at 12% annual interest compounded monthly.

What is your payment if you pay off the loan in 6 months?

Interest rate (APR) 12% per year

Years 0.5
Principal $2,000.00
Payments $345.10
 Example: Repayment Schedule

The repayment schedule

Month Old balance Interest Payment New Balance
0 $2,000.00
1 $2,000.00 $20.00 $345.10 $1,674.90
2 $1,674.90 $16.75 $345.10 $1,346.56
3 $1,346.56 $13.47 $345.10 $1,014.92
4 $1,014.92 $10.15 $345.10 $679.98
5 $679.98 $6.80 $345.10 $341.68
6 $341.68 $3.42 $345.10 $0.00
 Standard arguments

• rate: Interest rate (in decimal) per period

• nper: Number of periods
• pmt: Regular payment
 More standard arguments

• pv: Present value: The amount the

series of future payments is worth
now. The beginning value.

• fv: Future value: The amount the

series of future payments will be
worth in the future. The final value.

• type 0 = payment at end of period (default)

1 = payment at beginning
 PMT( ) Payments

• Returns the periodic payment for an annuity or loan

• PMT(rate, nper, pv, fv, type)

• The first 3 (red) arguments are required

• Example : 12% interest compounded monthly, 3 years,

borrow $6021.50

• Monthly payment
= -PMT(.12/12, 3*12, 6021.50) =200.00
 PMT( ) Example

• Ms JustRetired has $200,000 to invest at 10% annual

interest. Her goal is to have $100,000 left after 5
years. If she makes equal withdrawals each year for 5
years, how much can she withdraw each year?

• PMT(rate, nper, pv, fv, type)

= PMT(0.10, 5, -200000, +100000)
= $36,380
 PV( ) Present Value

• Returns the present value of an investment. The

present value is the total amount that a series of
future payments is worth now. That is, it is the
beginning value of the investment or loan.

• PV(rate, nper, pmt, fv, type)

 PV( ) Example

• A person promises to pay you $200 per month for 3

years. If you assume 12% interest compounded
monthly, what is this annuity worth today?

• How much can you borrow at 12% annual interest

compounded monthly and repay in 3 years paying
$200 per month?

• = -PV(0.12/12, 3*12, 200) = 6021.50

 FV( ) Future Value

• Returns the future (final) value of an investment. The

future value is the total amount including interest that
series of payments will be worth.

• How much money will there be in your account if you

make regular payments for a period of time?

• FV(rate, nper, pmt, pv, type)

 FV( ) Examples

• You will make $200 a month payments into a 12%

annual interest payable monthly account. How much
will you have after 3 years?

• = -FV(0.12/12, 3*12, 200) = 8615.38

• You will put $1000 in your account that pays 5%

annually compounded monthly. You will add $100 to
the account every month. How much will you have
after 10 years?

• = -FV(0.05/12, 10*12, 100, 1000) = 17175.24

NPER( ) Number payments needed for an investment

• Returns the number of periods for an investment

based on periodic, constant payments and a constant
interest rate

• NPER(rate, pmt, pv, fv, type)

Example:
• Each month you put $200 into bank account.
Assuming a 12% annual interest rate payable monthly,
how many years will you need to save before you
have $8615.38 in the account?

• = NPER( 0.01, 200, 0, -8615.38)/12 = 3

 RATE( ) Effective interest rate

• Returns the interest rate per period of an annuity

• Gives the effective interest rate given the number of
periods, the periodic payment, final value and initial
value
• RATE(nper, pmt, pv, fv, type)

Example:
• You bought $1,000 of shares in a mutual fund initially and then
$100 more each month. After 10 years, your shares are worth
$17,175.24. What was the effective interest rate? (Assume the
interest is compounded monthly and paid at the end of the
month.)
• =RATE(12*10, 100, 1000, -17175.24, 0)*12
The Mortgage Worksheet
 Date Functions

=Date coverts a date into a date number. Excel can

represent any given date as a serial number equal to the
number of days from Dec. 31, 1899 to the date in question.
=DATE(year number, month number, day number)
Enter the date into a cell (F5) with the =Date function. Then
enter the Report date with the =Date function into another
cell (L6). The difference between these dates (in number
of days) can be calculated with the formula =L6-F5.
 Commonly used date functions

Since dates are stored as integers, you can subtract one date from another to see
how many days there are separating the two dates. The figure below provides
additional details about the common date functions in Excel.
 The TODAY and NOW functions

• The TODAY and NOW functions always display the

current date and time.

• You will not normally see the time portion unless you
have formatted the cell to display it.

• If you use the TODAY or NOW function in a cell, the

date in the cell is updated to reflect the current date
and time of your computer each time you open the
workbook.
 Custom functions

• Some functions can be implemented in Visual Basic.

Gaining Proficiency: Formatting

© Oleg Vlasov, KIMEP, Fall 2002

Excel Worksheet
 Modifying the Worksheet

• Insert command
 Modifying the Worksheet

• Delete command
 Modifying the Worksheet

• Page Setup command and dialog box

 Excel Formatting

• Column widths
• Row Heights
• Numeric Format
• Alignment
• Fonts
• Borders, Patterns, and Shading
 Types of Numeric Formats

 General  Percentage
 Number  Fraction
 Currency  Scientific
 Accounting  Text
 Date  Special
 Time  Custom
 Comments

• Right click on the cell & select Insert comment.

• You may edit or delete the comment by right clicking

on the cell & selecting your choice.

Y 790,343 695,034 263,448

Y 1,934,349 1,793,090 483,587
Tanya Goette:
Y 2,103,049 2,001,304 420,610
This store looks
N 1,785,323 1,593,032 357,065
really great!
Format Cells Command