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 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. 1
2. Under the Category menu, click on Percentage and leave the Decimal places set to 2. Click on the OK 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 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 2
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 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 3
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 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. 4
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 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 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 5 PC Center at the Carnegie Library of Pittsburgh www.carnegielibrary.org/locations/pccenter 412-578-2561 Main Library 412-363-6105 East Liberty