1. Exploring Microsoft Excel 2003
Chapter 4: Spreadsheets in Decision Making: What If?
Robert Grauer and Maryann Barber
Committed to Shaping the Next Generation of IT Experts.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

2. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
Using Functions
Function – a predefined computational task
Requires arguments
Values the function uses to calculate answers
Returns a value
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3. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
The PMT Function
Calculates a periodic payment, such as a car or mortgage payment
Based on:
Amount financed
Interest rate
Number of periods
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4. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
Using the PMT function
Amount financed expressed as a negative number
Number of payments multiplied by 12
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.)
Interest rate divided by 12
Amount financed, interest rate, and the term, are all isolated as assumptions. One or more assumptions can be changed
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

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The FV function
Returns the future value of a series of payments
For example, contributions to a retirement plan
Based on:
Number of periods
Expected rate of return
Amount invested each period
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6. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
Using the FV Function
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, While that may not have anything to do with Excel, it is a valuable lesson for the students to learn now.
Amount of contribution, rate of return, and years contributing are all expressed as assumptions
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

7. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
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
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8. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
The Function Wizard
Enter arguments into text boxes
Collapse button shrinks dialog box if necessary
Value returned by the function (answer) is displayed
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.
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9. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
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
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.
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10. Using the Goal Seek Command
Enter the cell containing the desired result
Enter the desired value
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.
Enter the cell containing the desired result
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11. 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
This is a review of material covered in chapters 1 and 2.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

12. Using Mixed References
Absolute reference used for amount of contribution
Mixed references used for number of payments, rate of return
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

13. 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
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!
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14. 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
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.
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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.)
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

16. Using the IF Function Incorrectly
Value_if_true entered as a conditional test. Function will return True or False
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

17. Using the IF Function Correctly
Value_if_true entered as a value. Value_if_false entered as a cell reference
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.
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18. Exploring Office 2003 Vol 1 2/e - Grauer and Barber
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
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

19. Using the VLOOKUP Function
Look up the value found in cell I4, in this case, the semester average
This argument tells the function where to look. Absolute references used for the table
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.
Look in the second column of the table, NOT in column J
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

20. 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
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.
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Freezing Panes
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.
Window Menu
As you scroll back up, rows 4-8 will become visible again
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22. 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
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23. 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
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber

24. Using the AutoFilter Command
Click the dropdown on the Homework column, then select Poor as the criteria
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.
Exploring Office 2003 Vol 1 2/e - Grauer and Barber