Excel Functions By Hani Almohair Microsoft Office 2003

Objectives  Describe the PMT (payment) and FV (future value) functions  Use the PMT and FV functions  Use the IF function to help in the decision-making process: provide decision making  Define and use a mixed reference  Use the Statistical functions, AVERAGE, MAX, MIN, COUNT and COUNTA functions  Use the logical functions AND & OR

Overview  Learn to use spreadsheets as a tool in decision making  Use financial functions  Use statistical functions  Use absolute, relative, and mixed cell references

Analysis of a Car Loan  Can I afford it?  How do I calculate for: rebates Down payments interest rates the number of payments

Analysis of a Car Loan  Set up a worksheet template with initial conditions  Use a PMT function which requires interest rate/period, number of periods, and amount of loan Payment amounts and the number of payments are usually expressed in months, while interest rates are annual rates. Divide the interest rate by 12 to come up with a monthly rate The amount of the loan (present value) should be expressed as a negative number.

PMT Function Remember : A function is a predefined formula =PMT(B8/12;B9*12;-B7) Interest rate per period ( annual rate divided by 12) Number of periods( 4 years x 12 months/year A mount of loan ( as a negative amount)

How Much Money Will I Have at Retirement?  The Future Value (FV) function to return the future value of a series of payments  Use the FV function which requires the expected rate of return, the number of periods, and the investment each period.

FV Function ( the rate of return )  Use the FV function which requires the expected rate of return, the number of periods, and the investment each period. Amount at retirement = FV (rate of return, Term, Periodic payment) B17 B15 B16 B14 = FV (A1, A2, -A3)

Inserting a Function  Use the Insert Function command from the Insert menu  Use the list box to select the name of the function functions categorized by function  Let the Wizard help you enter the arguments

Isolate Your Assumptions  Enter your assumptions (the arguments needed for the function) into cells and use those cells for your arguments For example, in the PMT function, enter the loan amount, number of payments, and interest rate into cells, then use those cells in the PMT function  Change the values in those cells to test different scenarios Easier than editing the formula when you want to change on or more of your variables

Getting the most from Excel  Relative versus absolute addressing in a worksheet Knowing the difference and when to use each when copying makes setting up your worksheet more efficient and more accurate  Mixed references Either the row or the column is absolute; the other is relative  Don’t forget to isolate your assumptions!!

PMT Function =PMT(B8/12;B9*12;-$B$7) Interest rate per period ( annual rate divided by 12) Number of periods( 4 years x 12 months/year A mount of loan ( as a negative amount) Relative versus absolute addressing in a worksheet

Mixed references Either the row or the column is absolute; the other is relative FV function =FV(C$5;$B6;-$D$3) Mixed reference to cell C$5. Mixed reference to cell $B6 Absolute reference to cell D3

Using Functions in Excel Statistical Functions  Statistical Functions: MAX,MIN, AVERAGE, COUNT and COUNTA Use functions instead of arithmetic expressions  IF function enhances decision making allows for different results based on different conditions

Average Function  =(A1+A2+A3)/3  =AVERAGE(A1:A3)  =AVERAGE(A1:A3;200)  =AVERAGE(A1:A3;C2) MAX,MIN Functions =MAX(A1:A3) =MIN(A1:A3)

COUNT and COUNTA Functions  =COUNT(A1:A3) Returns the number of numeric entries.  =COUNTA(A1:A3)  Return the number of numeric and text entries.

The IF function  Allows for different results, based on a condition for example, if you work over forty hours in a week, you will receive overtime pay  Requires three arguments: a condition, which Excel must be able to evaluate as true or false a value if true a value if false  The value if true and value if false may contain additional (nested) IF functions for more complex decisions.

IF functions  Enables decision making to be implemented within a worksheet.  =IF(condition,value-if-true, value-if-false) Condition is either true or false Value returned for a true condition

Operators that used with IF Function OperatorDescription  =Equal to  <>not equal to  <less than  >Greater than  <= less than or equal to  >= Greater than or equal to

AND & OR  And: return true if all its arguments are true, return false if any argument are false.  OR: returns true if any arguments are true, return false if all arguments are false

Summary  Financial functions (PMT and FV)  Statistical functions (MAX, MIN, AVERAGE, and COUNT)  Decision making functions (IF )  Isolate and clearly label initial assumptions