Basic Excel
Guide and Workbook
by
Michael R. Gordon
A supplement to:
Contemporary Mathematics
for
Business and Consumers, 6th Edition
by Robert A. Brechner
Table of Contents
Foreword ........................................................................................................... ii
Microsoft Excel Basics ...................................................................................1
Spreadsheet Layout ......................................................................................1
Cell Reference and Selection .......................................................................1
Cell Contents................................................................................................2
Text Entry ....................................................................................................2
Number Entry...............................................................................................2
Formula Entry ..............................................................................................2
Internal Values and Displayed Values .........................................................2
Correcting Errors .........................................................................................3
Change Column Width ................................................................................3
Displayed Number of Decimal Places .........................................................3
Try It: Change Displayed Decimal Places ...................................................4
Arithmetic Operators ...................................................................................5
Arithmetic Operators in Formulas ...............................................................5
Formulas That Reference Cells ....................................................................5
Try It: Simple Interest ..................................................................................6
Try It Simple Interest Excel Solution ..........................................................6
Try It: Compound Interest ...........................................................................6
Try It Compound Interest Excel Solution ....................................................7
Review Exercises .........................................................................................7
Invoices ........................................................................................................9
The IF() Function .......................................................................................10
Function Nesting ........................................................................................10
Demonstration Sheet ..................................................................................10
Try It: Invoice Using Excel........................................................................11
Try It Solution: Excel Invoice....................................................................11
Propagating a Formula ...............................................................................12
Review Exercises .......................................................................................13
Better Invoice Design ................................................................................15
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Foreword
This workbook has been created to give the student a very brief introduction
to Microsoft Excel and its use in solving the same type of problems that may be done
on a financial calculator. Excel on a personal computer is often the preferred tool of
choice in an office environment where multiple and repeat calculations are the norm.
Advantages of using Excel are that the results in a spreadsheet may be printed or
exported to a file, emailed to a branch office or client, or copied to a new file, then
revised into a similar spreadsheet for a related financial calculation. A few example
problems and solutions using Excel are given.
Although the figures in this section show Excel 2003, the spreadsheet, Name
Box and Formula Bar arrangement is similar in Excel 2007. The tool icons are the
same in both versions, except that in Excel 2003 they are located in toolbars, whereas
in Excel 2007 they are found in tool clusters.
ii
Basic Excel Guide and Workbook
When a set of calculations is frequently repeated it is often more productive
to set up a spreadsheet on a personal computer rather than to use a calculator each
time the calculation is to be done. Microsoft Excel is the tool of choice for a majority
of businesses for this situation. The following introduction will give you an overview
of the basic concepts of Microsoft Excel.
Spreadsheet Layout
When the program is first opened, it presents a blank workbook that has three
spreadsheets, labeled at their bottoms on tabs as Sheet1, Sheet2 and Sheet3. Sheet1 is
the default sheet. Sheet3 is shown selected in the below figure. A sheet may be
renamed by double clicking on its name, then entering the desired name followed by
the Enter key. Each sheet’s name must be different from the names of all other sheets
in a workbook.
Each sheet is comprise of cells arranged in rows and columns. Each row is
labeled at its left end with a number, and each column at its top with a letter or letter
pair. The numbers increase going down the spreadsheet, with the highest number
being 65536. The column letters go to the right from A to Z, then AA to AZ, etc.
until the last column which is IV.
Cell Reference and Selection
Each cell is named (referenced) by its column letter (or letters) followed by
its row number. In the above figure, the selected cell is A1. Its name appears in the
Name Box, which is just above where its says Book1. Any cell may be selected by
pointing to it with the mouse cursor and clicking on it. The selected cell will have a
heavy border around it and a small black square in its lower right corner.
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Cell Contents
Cells may remain empty, or they may contain one of three types of entries:
text, numbers or formulas. The following figure illustrates all three types.
Text Entry
Cell A1 has text. Excel assumes you are entering text if the first character is
not a number, an equal sign, a plus sign or a minus sign. Text is displayed left aligned
in the cell. If you want to enter a label that begins with a number, but you want Excel
to treat the cell as text, you must enter an apostrophe as the very first character,
followed by the number. The apostrophe will not be displayed after the Enter key has
been pressed and the label will be left aligned.
Number Entry
Cell C2 contains the number 26.48. Excel assumes you are entering a number
when the first character entered is a number or a sign. Numbers are displayed right
aligned by default.
Formula Entry
In the above figure, cell B3 is selected as can be discerned by its heavy
border, and also by its name in the Name Box. It looks like it contains a number, but
in the Formula Bar located just to the right of the fx in the top of the figure, you see
that it actually has a formula, =C2. This means that cell B3 will evaluate cell C2 and
display the result. When you enter an equal sign as the first character in a cell, Excel
assumes you are entering a formula.
Internal Values and Displayed Values
Cells may be formatted to display a specified number of decimal places, or to
be aligned in the center of the cell, or to display the result as currency. These are only
three examples of the many choices the creator of the spreadsheet may use. Numeric
values always have their full accuracy retained internally even when the displayed
value has a limited number of decimal positions specified. Note that a number is
rounded for display purposes. This means that 3.785 will be displayed to two decimal
places as 3.79.
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Correcting Errors
Often a mistake is made when typing numbers or text into a cell. If the
error is detected while still making the entry, you may backspace the error out
and retype. If the error is not found until after the Enter key has been pressed,
the cell may be selected using the mouse, then edit the contents in the formula
bar, or else simply press the Delete key to wipe it out and start over.
Change Column Width
Situation: when a text entry is too long to fit in a cell it will spill over
into the adjacent cell to the right so long as that cell is empty. But if the cell
on the right already contains something, then the display of the text you are
entering will be cut off at the right border of the cell, although the system still
accepts all of it internally.
Another situation that occurs sometimes is when instead of an
expected number, the displayed value in a cell is a row of pound signs. This is
Excel telling you the cell isn’t wide enough to display the entire number.
For either of the above situations, you may wish to widen the column
so the text or number will display correctly and completely. This may be done
in one of two ways: automatically or manually. For either method begin by
placing the mouse cursor over the right edge of the cell of the column letter or
letters at the top of the column. The cursor will change to a black cross having
arrowheads at the ends of the crossbar:
To automatically widen the column, double click the left mouse button. The
column width will increase or decrease to accommodate the widest data in any
cell in the column. To manually widen the column, press and hold the left
mouse button then drag the border to the right as far as you need to, then
release the mouse button. Columns may be made narrower manually by
dragging the border to the left instead of to the right.
The height of a row may be changed in a similar manner by pointing to
the cell border below the number of the row whose height you wish to change,
then either double click or click and drag.
Displayed Number of Decimal Places
Excel will by default display all the decimal places needed by the number.
You may decrease the number of places displayed by selecting the desired cell, then
clicking on the Decrease Decimal tool
once for each place by which you want to
reduce the displayed value. To increase the number of displayed places, select the
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cell then click the Increase Decimal tool
displayed decimal.
once for each place to be added to the
Try It: Change Displayed Decimal Places
Select an empty cell, then type 3.785 and press the Enter key. Next press the
Up Arrow key to reselect the cell. Now locate the Increase Decimal and the Decrease
Decimal tools on the toolbar (Excel 2003) or in the tool cluster (Excel 2007). Click
the following sequence and observe the effect on the displayed number after each
click:
Decrease Decimal, Decrease Decimal, Increase Decimal, Increase Decimal,
Increase Decimal.
What value is displayed when you have finished with the sequence?
Try It Solution
Here is the appearance of the cell after you type in the number and press the
Enter key (cell C2 was selected for the data entry):
And after the Up Arrow key:
And as the displayed decimal places change sequence progresses:
Notice the displayed value is rounded as the number is reduced, and the
value is restored as the number increases. The end of sequence displayed value is
3.7850.
Arithmetic Operators
The operators in formulas for typical arithmetic are +, -, *, / and ^. They are
respectively for addition, subtraction, multiplication, division and exponentiation.
Parentheses may also be used to denote subexpressions. Note that in Excel you must
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use the multiplication symbol between a value and the subexpression surrounded by
parentheses it multiplies. There is no implicit multiplication in Excel as there is in
algebraic notation.
Arithmetic Operators in Formulas
In a blank spreadsheet, use cell A2 to evaluate 33 + 3 × 3 all together
divided by 6, then reduced by 2.
Solution Strategy
In cell A2 enter =(3^3+3*3)/6-2 followed by the Enter key. Notice that this
formula uses all five arithmetic operators and has a parenthetical expression. Excel
will begin evaluation inside the parentheses with the exponentation operator,
followed by the multiplication, then the addition. Using the calculated value for the
parenthetical expression, it then does the division, and finally the subtraction.
Formulas That Reference Cells
On the same spreadsheet you used for the previous example, enter 2 in cell
C1 and 3 in cell D1, then create a formula in cell C2 that again finds the result of 33
+ 3 × 3 all together divided by 6, then reduced by 2.Your formula should only
reference cells C1 and D1.
Solution Strategy
In the Formula Bar is the formula that was entered in cell C2.
In this formula, =(D1^D1+D1*D1)/(C1*D1)-C1, note that the contents of
cells C1 and D1 are multiplied together to get the divisor 6, and that they are
enclosed in their own parentheses. You may remove those parentheses to see what
happens when they are not there: With cell C2 selected, edit the formula in the
Formula Bar by deleting ONLY the second pair of parentheses, then press the Enter
key and look at the value in cell C2. (Answer: 52)
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Try It: Simple Interest
Set up a spreadsheet to determine the simple interest on $400 after 5
years at 3.5%.
Try It: Simple Interest Excel Solution
The Applicable formula from Chapter 10 is I=PRT. This is done in Excel as
follows:
Enter the labels in column A, cells 1 through 4. Enter 400 in cell B1. Enter
3.5% in cell B2. Enter 5 in cell B3. Finally, enter =B1*B2*B3 in cell B4. Note that
cells B1 and B4 have been formatted as currency, and so they display two decimal
places and a dollar sign. Currency formatting is done by selecting the cell, then
clicking on the
tool. You may format a cell either before or after you enter a
value in it. Because you entered a percent sign as part of the value in cell B2, Excel
displays two decimal places there, too.
Notice that B4 is the selected cell in this figure, and it contains the formula
(see the formula bar), but it displays the result of evaluating the formula. The formula
references cells B1, B2 and B3, multiplying their values together. The advantage of
referencing cells, rather than copying their actual values into a formula, is that you
can change a number in a cell and the formula will immediately provide the answer
using the newly entered value. For example, if you wanted to know what the accrued
interest would be after only 3 years, select cell B3 and enter 3. The formula in cell B4
recalculates as soon as the new value is entered and provides the new answer:
$42.00.
Try it: Compound Interest
Use a spreadsheet to find the value after four years of $3,600 at 6%
compounded quarterly.
Try it: Compound Interest Excel Solution
The applicable formula from Chapter 11 is A=P(1+r)n where r is the periodic
rate and n is the number of periods. Rather than calculate r or n, let’s have Excel do it
for us. Set up a spreadsheet as follows: Enter the labels in column A. Format cell B1
as currency, then enter 3600. Enter 6% in cell B2. Enter 4 in cells B3 and B4. In cell
6
B5 enter the formula =B3*B4. In cell B6 enter the formula =B2/B4. In cell B7 enter
the formula =B1*(1+B6)^B5. Format cell B7 as currency. The completed sheet looks
like this:
In the above solution, the spreadsheet has both dependent and
independent formulas. The dependent formula is in cell B7, because it
depends upon the results from the formulas in cells B5 and B6. They are
independent because they only reference cells that have numbers in them, not
formulas. So Excel uses an evaluation sequence that evaluates the independent
formulas first, then evaluates the dependent formula using the results of the
independent formulas. This is similar to an expression that has a parenthetical
subexpression: the value inside the parentheses must be determined first. So it
is with independent formulas. Dependencies in complex spreadsheets may
have to chain through several dependent formulas before reaching the
independent ones.
Review Exercises
Use Excel to find the desired value.
1. Simple interest on $655 at 1.8% for five and one-half years.
2. The maturity value of a simple $2,300 note at 2.3% for three years.
3. The value in eight years of $1,000 at 2.5% compounded monthly.
4. The value in two years of $46,000 at 3.5% compounded semiannually.
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5. The amount that must be deposited now into an account that is compounded
quarterly at 4.44% annual rate to be worth $26,500 after five years.
6. By how much will the initial deposit in problem 5 grow?
Review Exercises Solutions
1.
2.
3.
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4. From the previous spreadsheet you only need to change the values in cells B1, B2,
B3 and B4:
5. Here you change the label in cell A1, plug the applicable numbers into cells B2, B3,
B4 and B7, then enter the Present Value formula from Chapter 11 into cell B1.
6. Add to the previous spreadsheet a label in cell A8 and a formula in cell B8.
Invoices
Spreadsheets are ideal for creating invoices. Once an empty invoice is set up
with all the formulas, it remains to fill in the numbers, let the formulas calculate the
extensions, tax and totals, and print the invoice.
Suppose we want to have a line in an invoice that may either be blank or else
have an order item entered. If the line is blank, then the extension should also be
blank, but if there is an entry on the line, then the extension should show the amount
for that line and be included in the total. Excel has a useful function that can help us
set up such an invoice.
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The IF() Function
The IF() function has three expressions that are entered between the
parentheses, separated by commas. The first expression is a relation to be tested, with
an expected result of TRUE or FALSE. A relation usually compares one value with
another using an equal sign, greater than sign (>), less than sign (<), and such.
An example of a relation for the first expression might be B3>0. If the result
is TRUE; that is, if the contents of cell B3 is greater than 0, the second expression is
used as the result of the function and gets displayed in the cell. If the first expression
is FALSE (cell B3 evaluates to zero or a negative number), then the third expression
is used to determine what gets displayed. Put all together, a sample IF() function
would be
=IF(B3>0,B2+B3,””).
This says that if B3 is greater than zero, then the value of cells B2 and B3 (the second
expression) are to be added together and displayed, but if B3 is zero or less, then the
cell containing the IF() function is to be blank, as indicated by the pair of quotation
marks having nothing between them (the third expression).
Function Nesting
A function may appear within another function as one of the expressions in
the outer function. The following example shows how to set up a spreadsheet to
illustrate the IF() function, and it uses an inner IF() function as one of the expressions
in the outer IF() function.
Demonstration Sheet
Build the following spreadsheet on Sheet1. In cell D2 enter a SUM() function
to add the contents of cells A2, B2 and C2 like this: =SUM(A2:C2). The expression
in the parentheses means all the cells within the range A2 through C2. A range may
be several contiguous cells in a row or column, or all the cells in a rectangle. For a
rectangle range, list its upper left cell and its lower right cell. In cell C1 type the text
The sum is. In cell D1 enter the nested IF() function
=IF(D2>0,"positive",IF(D2<0,"negative","zero")).
Here is the setup spreadsheet showing the functions entered in the Formula Bar:
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Now you need to test your spreadsheet by entering various numbers in cells
A2, B2 and C2. Try both negative and positive numbers, observing what appears in
cell D1 each time you change one of the numbers. Here are three possibilities:
You probably noticed that the nested IF() functions in cell D1 provide different
words when the sum in cell D2 is positive, zero or negative. We are now ready to
construct a useful invoice spreadsheet.
Try It: Invoice Using Excel
Set up the Organic Grain Cereal Co. invoice shown in Chapter 7, page 194 in
the 6 edition of the text, providing a dozen lines for order items, although only three
products are shown on the invoice. The total for each ordered product should be
calculated by a formula that includes the IF() function. The total cell should either
display the extended price when an item appears on the line, or else it should be
blank (not zero) when there is no ordered item on the line.
th
Try It Solution: Excel Invoice
First, erase all the cells in your test sheet by clicking on the empty cell that is
immediately below the left end of the Name Box. This empty cell is above the row 1
label and to the left of the column A label. Clicking it selects every cell in the sheet.
With all the cells selected, press the Delete key. All the cells are now empty.
Next rename Sheet1 by double clicking its name on the tab at the bottom of the sheet
and typing in the name Invoice followed by the Enter key.
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The first several rows of an invoice will contain text and dates. Copy the
example from Chapter 7, page 194 in the 6th edition, adjusting column widths, using
upper case and bold type where shown, and adjusting the alignment of text in cells as
needed:
Starting on row 17 enter the line items of the invoice. Formulas will be
entered in column J. There are a dozen rows into which line items may be entered.
Each column J of those rows (17 through 28) will contain a formula to calculate its
row amount, but do not enter the formulas yet. Note that the quantities in columns B
and D are entered as pure numbers in a separate column from their unit type, cs. in
this example. This is because if numbers are to be used in a formula they may not
have text in the same cell with them. That is why the kind of unit is listed in a
separate cell.
Propagating a Formula
It would be tiresome and error prone to have to type a formula into each cell
in J column, rows 17 through 28. Fortunately, you only have to enter the formula in
cell J17 and press the Enter key. Do it now. Then press the Up Arrow key to select
cell J17. Look at the Formula Bar to make sure you entered the formula correctly
before you go on. Next, move the mouse cursor over the little black square, called the
fill handle, in the lower right corner of the cell. As the cursor gets there it changes
into a black cross. Now press and hold the left mouse button and drag the cursor
down the column, stopping after you pass far enough into cell J28 so that the heavy
black border includes that cell. Now release the mouse button. This copies the J17
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formula into all the cells you passed down through, and Excel automatically adjusted
the row numbers as it propagated the formula into each cell.
At the bottom of the sheet, starting on row 29, is the summary and total area.
First enter the labels in column H.
In cell J29 enter the function =SUM(J17:J28). Enter the numbers into cells
J30 and J31. Type the function =SUM(J29:J31) into cell J32.
Review Exercises
Use the Try It spreadsheet you created to do the following exercises.
1. Change the name of the sheet from Invoice to Kroeger Order
2. Put an additional order item on line 20: 38 cartons of Oatmeal Almond
Crunch 22 ounce. Only 35 cartons were shipped. Cost is $15.58 per carton.
3. Change the Insurance from a number to a formula that calculates it: $11 plus
$1 per whole hundred dollars of the Invoice Subtotal. (Hint: use the INT()
function to get the whole number portion of the Invoice Subtotal divided by
100.)
4. (Challenge) A company memo has been issued stating that freight charges
will be 1.8 cents per ton-mile, effective immediately. Your boss wants you to
modify the invoice spreadsheet:
a) Use column A to display the weight in ounces of a box of cereal on
its order line.
b) Show the distance in miles to be shipped on the same line as the
freight charges appear. The distance from the cereal factory in
Boulder to the Kroeger distribution center in Atlanta is 1425 miles.
c) Use a formula or formulas to calculate the freight charges. A case
has 32 boxes of cereal in it, whereas a carton only has 24 boxes in it.
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Review Exercise Solutions
1. Double click the label tab, type in Kroeger Order and press the Enter Key
2. In row 20 enter the data in cells B through F, and cell I20, as shown below.
3. The formula for cell J31 is shown in the Formula Bar.
4a. Enter a label in A16 to identify the numbers below it. Copy the number of
ounces from the description.
4b. The number of miles in cell G30 has been aligned left to be closer to its label.
4c. For each order line, the ounces per box must be multiplied by the quantity
shipped, then by the number of boxes per carton or case, as applicable. To
convert to pounds, divide the total of the above products by 16, then divide
by 2000 to convert to tons. Finally, multiply by the miles and by the ton-mile
rate. Note the Formula Bar has a long, complicated formula that only applies
to this precise invoice as it has been filled in with only four items ordered. Is
this a good way to set up the invoice? What if additional items are ordered?
Will you need to change the formula?
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Better Invoice Design
Yes, you will need to change the formula if more items are ordered. A more
general purpose sheet would have a cell for each order item that calculates the
weight in pounds, say in column K. It could use the IF() function to select a
multiplier for the number of boxes per shipping unit. Assume that cases and
cartons are the only kinks of units shipped shipped by Organic Cereal Co. The
row 17 formula for this might be =A17*D17*IF(E17=”cs.”,32,24)/16. Then it
could be propagated down through cell K28 by using the fill handle. But using
this formula on lines without an order item would result in a zero being
displayed. So a better formula would provide a blank in the K cell for blank item
lines: =IF(D17=0,””,A17*D17*IF(E17=”cs.”,32, 24)/16). With this formula
in column K of the order lines, then the formula in J30 would only have to
convert the sum of the pounds to ton-mile-dollars. Notice in the figure below that
the selected cell, K21, is blank, but has a formula in it as shown in the Formula
Bar.
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Here is the FREIGHT CHARGES cell, J30, showing the new formula that sums
the pounds in column K and calculates the charge:
=SUM(K17:K28)/2000*G30*.018.
This invoice sheet is now more general purpose than if the longer, more
complicated formula was used that was specific just to the four items ordered.
The latter set up will work for up to 12 items that may be entered on the sheet,
because the insurance and freight charges will automatically be calculated no
matter if the number of items on the invoice is one, a dozen, or any number in
between.
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