1. Excel Functions

2. Prof. Leighton2 A Function Performs a predefined operation Performs a predefined operation A function A function Accepts one or more arguments as input Accepts one or more arguments as input Performs the indicated calculation Performs the indicated calculation Returns another value as output Returns another value as output

3. Prof. Leighton3 Nine Categories Financial Financial Date&Time Date&Time Math&Trig Math&Trig Statistical Statistical Lookup&Reference Lookup&Reference Database Database Text Text Logical Logical Engineering Engineering All All

4. Prof. Leighton4 Function Syntax Begin with an = sign Begin with an = sign Function’s NAME Function’s NAME No space No space Open parenthesis Open parenthesis Argument1, argument2 Argument1, argument2 Close parenthesis Close parenthesis

5. Prof. Leighton5 Statistical Functions =Average(number1,number2,..) =Average(number1,number2,..) Excel sums the values in the range and then divides by the number of non-blank cells in the range Excel sums the values in the range and then divides by the number of non-blank cells in the range =Stdev(number1,number2,..) =Stdev(number1,number2,..) =Max(number1,number2,..) =Max(number1,number2,..) =Median(number1,number2,..) =Median(number1,number2,..) =Pearson(number1,number2,..) =Pearson(number1,number2,..) Pearson correlation coefficient Pearson correlation coefficient

6. Prof. Leighton6 Counting Functions =Count =Count Counts the number of cells that contains numbers Counts the number of cells that contains numbers =Counta =Counta Counts the number of cells that are not empty Counts the number of cells that are not empty Both numeric and text entries are included Both numeric and text entries are included =Countblank(range) =Countblank(range) Counts the number of empty cells Counts the number of empty cells =Countif(range,criteria) =Countif(range,criteria) Counts the number of cells within a range that meets the condition Counts the number of cells within a range that meets the condition

7. Prof. Leighton7 Annuity Functions An annuity is a series of constant cash payments made over a continuous period An annuity is a series of constant cash payments made over a continuous period A car loan or a mortgage is an annuity A car loan or a mortgage is an annuity Benefits received each period is an annuity Benefits received each period is an annuity Cash you pay out is represented by a negative number; cash you receive is represented by a positive number Cash you pay out is represented by a negative number; cash you receive is represented by a positive number A $1,000 deposit to the bank would be represented by the argument -1000 if you are the depositor A $1,000 deposit to the bank would be represented by the argument -1000 if you are the depositor A $1,000 deposit to the bank would be represented by +1000 if you are the bank A $1,000 deposit to the bank would be represented by +1000 if you are the bank The PV Function The PV Function Value now of an entire stream of future benefits or costs Value now of an entire stream of future benefits or costs

8. Prof. Leighton8 Annuity Functions - PV Syntax Syntax =PV(rate,nper,pmt,fv,type) =PV(rate,nper,pmt,fv,type) Rate Rate Interest rate per period Interest rate per period 10 percent annual interest rate; yearly benefits to MA degree 10 percent annual interest rate; yearly benefits to MA degree Nper Nper Total number of payment periods in an annuity – 43 years Total number of payment periods in an annuity – 43 years Enter 43 into the formula for nper Enter 43 into the formula for nper Pmt Pmt Payment (benefit) made each period Payment (benefit) made each period Cannot change over the life of the annuity Cannot change over the life of the annuity

9. Prof. Leighton9 Annuity Functions - PV Fv Fv Future value, or a cash balance you want to attain after the last payment is made Future value, or a cash balance you want to attain after the last payment is made If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0) If fv is omitted, it is assumed to be 0 (the future value of a loan, for example, is 0) Type Type Is the number 0 or 1 Is the number 0 or 1 Indicates when payments are due/received Indicates when payments are due/received 0 or omitted = at the end of the period 0 or omitted = at the end of the period 1 = at the beginning of the period 1 = at the beginning of the period

10. Prof. Leighton10 Annuity Functions - PV The following functions apply to annuities: The following functions apply to annuities: PMT CUMIPMT PMT CUMIPMT PPMTIPMT PPMTIPMT CUMPRINCFVSCHEDULE CUMPRINCFVSCHEDULE PV FV PV FV RATE RATE Be consistent about the units for specifying rate and nper Be consistent about the units for specifying rate and nper Monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for rate and 4*12 for nper. Monthly payments on a four-year loan at 12 percent annual interest, use 12%/12 for rate and 4*12 for nper. Annual payments on the same loan, use 12% for rate and 4 for nper Annual payments on the same loan, use 12% for rate and 4 for nper

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12. Prof. Leighton12 The IF Function Decision rule for investing is if PVB>PVC, then invest, otherwise (else) do not invest Decision rule for investing is if PVB>PVC, then invest, otherwise (else) do not invest IF function specifies the if-then-else logic required to calculate information based on one or more conditions IF function specifies the if-then-else logic required to calculate information based on one or more conditions

13. Prof. Leighton13 The IF Function Syntax IF(logical test, value if true, value if false) IF(logical test, value if true, value if false) Logical test is any value or expression that Excel evaluates as true or false Logical test is any value or expression that Excel evaluates as true or false Value if true - Excel uses this expression if the logical test is true Value if true - Excel uses this expression if the logical test is true Value if false - Excel uses this expression if the logical test is false Value if false - Excel uses this expression if the logical test is false

14. Prof. Leighton14 Should Our Student Invest? Logical test is PVB>PBC Logical test is PVB>PBC E53>F53 E53>F53 Value if true - Invest Value if true - Invest Value if false - Do not Invest Value if false - Do not Invest IF(E53>F53),Invest,Do not invest) IF(E53>F53),Invest,Do not invest)

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16. Prof. Leighton16 Buying a Car BMW M5

17. Prof. Leighton17 What Will the Monthly Payments Be? Amount of loan, pv Amount of loan, pv Interest rate, rate Interest rate, rate Number of payment periods, nper Number of payment periods, nper Term of the loan Future value, fv Future value, fv Future value of a loan=0 Type, when payments are due Type, when payments are due

18. Prof. Leighton18 Payment Function =PMT(rate,nper,pv,fv,type) =PMT(rate,nper,pv,fv,type) Returns the payment per time period Returns the payment per time period Cash you pay out is represented by a negative number by Excel Cash you pay out is represented by a negative number by Excel Cash you receive is represented by a positive number Cash you receive is represented by a positive number Keep the interest per period and the payment periods in the same units Keep the interest per period and the payment periods in the same units To calculate monthly payments on a four year loan To calculate monthly payments on a four year loan Use 12%/12 for rate and 4*12 for nper Use 12%/12 for rate and 4*12 for nper

19. Prof. Leighton19 Payment Function, cont. If you want the payment as a positive number If you want the payment as a positive number Enter the loan amount (pv) as a negative number Enter the loan amount (pv) as a negative number =PMT(.08/12,5*12,-15000) =PMT(.08/12,5*12,-15000) Place a negative sign before the function Place a negative sign before the function =-PMT(.08/12,5*12, 15000) =-PMT(.08/12,5*12, 15000)

20. Prof. Leighton20 Payment Function, Examples Monthly payment on a $10,000 loan, annual rate of 8%, term is 10 months, payment at the end of each month Monthly payment on a $10,000 loan, annual rate of 8%, term is 10 months, payment at the end of each month PMT(.08/12, 10, 10000) = -$1,037.03 PMT(.08/12, 10, 10000) = -$1,037.03 For the same loan, if payments are due at the beginning of the period For the same loan, if payments are due at the beginning of the period PMT(.08/12, 10, 10000, 0, 1) = -$1,030.16 PMT(.08/12, 10, 10000, 0, 1) = -$1,030.16

21. Prof. Leighton21 Saving Regularly - PMT Use PMT to determine how much to save each month to meet a specific goal Use PMT to determine how much to save each month to meet a specific goal Want to retire with one million dollars in 40 years Want to retire with one million dollars in 40 years Earn 10 % interest on your savings Earn 10 % interest on your savings How much must you save each month? How much must you save each month? Keukenhof, The Netherlands

22. Prof. Leighton22 Retiring a Millionaire PMT(.10/12, 40*12, 0, 1000000) = -$158.13 PMT(.10/12, 40*12, 0, 1000000) = -$158.13 Multiply the returned payment by nper to calculate how much is paid over the duration of the annuity Multiply the returned payment by nper to calculate how much is paid over the duration of the annuity $158.13*480 = $75,900 $158.13*480 = $75,900 Note, the pv = 0 Note, the pv = 0 fv = 1000000 fv = 1000000

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24. Prof. Leighton24 Lookup Table for Grades: Associate a Numeric Grade with a Letter Grade C starts at 70 and goes to 75.99

25. Prof. Leighton25 VLOOKUP Function Look-up value is a value or a cell reference of the item for which you need information Look-up value is a value or a cell reference of the item for which you need information It is the search item It is the search item Appears in the first column of the information table Appears in the first column of the information table Table-array is the range reference of the lookup table Table-array is the range reference of the lookup table

26. Prof. Leighton26 VLOOKUP Function Column index number is the column number in the information table from which the information should be found and returned to your cell Column index number is the column number in the information table from which the information should be found and returned to your cell Range-lookup is set equal to true (the default) and finds the closest match; to find an exact match, set = false Range-lookup is set equal to true (the default) and finds the closest match; to find an exact match, set = false

27. Prof. Leighton27 Lookup Table for Grades Look-up value is the 83 Table Array is A2:C11 Column index number 123 Student receives an 83 for the semester

28. Prof. Leighton28 Rules for VLOOKUP Function The values in the look_up table must be in ascending order. The values in the look_up table must be in ascending order. If Range-lookup is set equal to true (the default) the function returns the value from the table or the largest value less than or equal to the search item If Range-lookup is set equal to true (the default) the function returns the value from the table or the largest value less than or equal to the search item Student receives an 85 (search item) Student receives an 85 (search item) 83 is the largest value less <= 85 83 is the largest value less <= 85 Returns a B Returns a B

29. Prof. Leighton29 Rules for VLOOKUP Function If Range-lookup is set equal to false, the search item must be found or #N/A is returned If Range-lookup is set equal to false, the search item must be found or #N/A is returned The range of the information table should be absolute reference The range of the information table should be absolute reference