payment function exercise - northern tier library handouts/office 2007/exce… · payment function...
TRANSCRIPT
1
Payment Function Exercise
Follow the directions below to create a payment function exercise. Read through each
individual direction before performing it, like you are following recipe instructions.
Remember that to move between cells you can use your mouse, the arrow keys on the
keyboard, or the Name Box.
Remember, too, that there is usually more than one way to do something. If a different
way to do it occurs to you, go ahead and try it! If it doesn’t work, you can always click
the Undo button.
If you can’t remember what a button does, move the cursor over it and pause. A yellow
ToolTip will appear describing the button’s function.
The gray boxes will contain tips, suggestions, and reminders.
In the instructions, the following terms will be used: Click – a single left mouse click.
Command - a button displayed on a tab on the Ribbon.
Key – a key on the keyboard.
Part 1: Opening Excel & Entering the Information
1. Locate the Excel icon on the computer’s desktop and then double click on it to
open the program OR
2. Click on the Start button and locate the Excel program under All Programs and
then Microsoft Office. Click once on the name of the program, Microsoft Excel, to
open it.
3. Enter the information in the cells as illustrated in the table below. REMEMBER
that you can move to the next cell down by pressing the Enter key and you can
move the next cell to the right by pressing the Tab key. You can also select the
cell you want to type in with a single mouse click and then begin typing the text.
Adjust the column widths to approximate those in the table below using
the two-headed arrow mouse pointer you get when placing your mouse
between the column heading letters at the top of the screen.
Part 2: Formatting Cells & Extending the Cell Range
1. Select the cells A6 thru A9. Click on the dialog box launcher in the Number
group. When the Format Cells dialog box opens, make sure the Number tab is
selected.
2
2. Under the Category menu, click on Percentage and leave the Decimal places set to 2. Click on the OK button. With cells A6 thru A9 still selected move to the next
step.
3. Position your mouse pointer over the Fill handle in the bottom right corner of cell
A9 until you see the thin black plus sign. Click and drag down until you include cell A18 and see the screen tip 8.00%, then let go of the mouse
button. Cells A6 thru A18 should contain a series of percentages beginning with 5% and increasing by a quarter of a percent up to 8%.
4. Select cell B1 and click on the Accounting Number Format command in the
Number group on the Home tab on the Ribbon.
5. Select cells B6 thru D18 and click on the Accounting Number Format command
again.
6. Select cell A1. Hold down the Ctrl key on the keyboard, select cells A5 to D5 and
then cells B4 thru C4. Let go of the mouse button and then the Ctrl key. All of the
cell ranges (A1, A5 thru D5, and B4 thru C4) should be selected.
7. Click on the Bold command in the Font group on the Home tab.
8. Now, select cells B4 thru D5 and click on the Center command in the Alignment
group on the Home tab.
9. Select cells B4 thru D4 and click on the Merge & Center command in the
Alignment group on the Home tab.
Part 3: The First PMT Function
Advanced functions in Excel provide a way to do complex mathematical
calculations. For example, if taking out a loan for a fixed period of time with equal
payments you could use the following formula to calculate the amount of the
payment.
Where Pv represents the amount borrowed, rate represents the interest rate, and
Nper is the number of payments. Fortunately, Excel makes it much easier to
compute the amount of the payment using an advanced function.
1. Select cell B6 and then click on the Fx
button in front of the Formula bar.
When the Insert Function dialog box
opens, click on the down arrow at the
end of Or select a category: and then
click on Financial. Under the Select a
function: area, use the scroll bar to find
the PMT function. Click on PMT and
then click on the OK button.
3
NOTE: In the Function Arguments dialog box, you must specify which cell contains
the Pv (loan amount), the Rate (interest rate), and the Nper (number of payments).
The Rate and Nper must match the terms of the payment period. For example, if
looking for a monthly payment then the Rate must be the monthly interest rate and
the Nper must be in terms of months and not years.
2. The insertion point should be blinking in the text entry box to the right of the word Rate. Using your mouse, click on cell A6. Using the keyboard, type /12.
The text entry box should now contain A6/12. This converts the annual interest to
a monthly interest rate.
3. Press the Tab key on the keyboard. The insertion point should now be in the text
entry box to the right of Nper. 4. Using your mouse, click on cell B5 and then type *12. The text entry box should
now contain B5*12. This converts the number of years to the total number of
months in that 15 year period.
5. Press the Tab key on the keyboard. The insertion point should now be in the text
entry box to the right of Pv. Using your mouse, click on cell B1.
6. When this function has been completed, it will be copied to other cells. Because
of this, two of the references used in the function must be made Absolute Cell
References. The text entry box containing the loan amount and the text entry box
containing the number of years to make payments need to be changed.
7. Using your mouse pointer, click in the text entry box to the right of Nper and change the reference to cell B5 to $B$5.
8. Using your mouse pointer, click in the text entry box to the right of Pv and change the reference to cell B1 to $B$1.
9. Check your screen against the
picture to the right and if it
matches exactly click on the OK
button.
10. Cell B6 should still be selected
and now contains in red the
amount $790.79. This represents
the monthly payment to make for
a $100,000 loan at 5% annual
interest for 15 years.
11. With cell B6 still selected use the
Fill handle to copy this function to
cells B7 thru B18.
Part 3: The Second PMT Function
1. Select cell C6 and then click on the Fx button in front of the Formula bar. When
the Insert Function dialog box opens, click on the down arrow at the end of Or
select a category: and then click on Financial. Under the Select a function: area,
use the scroll bar to find the PMT function. Click on PMT and then click on the OK
button.
4
2. When the Function Arguments dialog box opens, the insertion point should be
blinking in the text entry box to the right of the word Rate. Using your mouse, click on cell A6. Using the keyboard, type /12. The text entry box should now
contain A6/12.
3. Press the Tab key on the keyboard. The insertion point should now be in the text
entry box to the right of Nper. 4. Using your mouse, click on cell C5 and then type *12. The text entry box to the
right of the Nper should now contain C5*12. This converts the number of years to
the total number of months in a 30 year period.
5. Press the Tab key on the keyboard. The insertion point should now be in the text
entry box to the right of Pv. Using your mouse, click on cell B1.
6. When this function has been completed, it will be copied to other cells. Because
of this, two of the references used in the function must be made Absolute Cell
References. The text entry box containing the loan amount and the text entry box
containing the number of years to make payments need to be changed.
7. Using your mouse pointer, click in the text entry box to the right of Nper and change the reference to cell C5 to $C$5.
8. Using your mouse pointer, click in the text entry box to the right of Pv and change the reference to cell B1 to $B$1.
9. Check your screen against the
picture to the right and if it
matches exactly click on the OK
button.
10. Cell C6 should still be selected
and now contains in red the
amount $536.82. This
represents the monthly payment
to make for a $100,000 loan at
5% annual interest for 30 years.
11. With cell C6 still selected, use
the Fill handle to copy this
function to cells C7 thru C18.
Part 4: Entering a Simple Formula
The last formula to be created will subtract the
15 year payment for each interest rate from the
30 year payment to determine the difference
in payments each month between a 15 year
and a 30 year loan. 1. Select cell D6. Type the formula =C6-B6
and press the Enter key on the keyboard.
2. Reselect cell D6 and use the Fill handle to
copy the formula to cells D7 thru D18.
3. The screen should now look like the picture
to the right.
5
PC Center at the Carnegie Library of Pittsburgh www.carnegielibrary.org/locations/pccenter
412-578-2561 – Main Library
412-363-6105 – East Liberty
Part 5: Protecting the Function Cells
Now that the time has been spent creating this table showing various interest rates at
two different yearly terms, it would be nice to be able to experiment by changing
the values in cells B1, B5, and C5. To make sure the functions and formulas do not
get accidentally changed, worksheet protection can be turned on.
1. Select cell B1. Hold down the Ctrl key on the keyboard and click on cell B5 and
then cell C5. Let go of the mouse button and then the
Ctrl key. Three cells should now be selected on the
worksheet: B1, B5, and C5.
2. Click the dialog box launcher in the Font, Alignment, or
Number group. When the Format Cells dialog box
opens, click on the Protection tab.
3. Click in the checkbox next to Locked to remove the
checkmark and then click on the OK button.
4. Click on the Review tab on the Ribbon and then click on
the Protect Sheet command in the Changes group.
5. Click in the checkbox next to Select Locked Cells to
remove the checkmark. If your screen looks like the
picture to the right, click on the OK button.
6. Experiment with changing the numbers in cells B1, B5, and C5 and notice how the
monthly payment amounts are affected.
7. Try to select any other cell. Because all of the other cells retain the locked
format, turning on protection will not allow these cells to be changed or even
selected.
8. Click on the Office Button and then click on Save As from the drop down menu.
9. The Save As dialog box will open. Using the down arrow at the right end of the
Save in: text entry box, select the drive or folder from the drop down menu where
you wish to save the exercise by clicking on your choice. 10. In the File name: text entry box at the bottom, delete Book1 and type in My
Payments.
11. Click on the Save button in the bottom right corner of the Save As dialog box.
12. Close this file and the Excel program by clicking on the X button in the upper
right corner of the screen.
6/17/2008