Advanced Applications

in Excel
Office 2007
3/25/2011
UWI Open Campus (Cayman)
Robert Geofroy

Contents
Introduction .................................................................................................................................... 5
Referencing ................................................................................................................................. 6
Relative referencing................................................................................................................. 6
Absolute ................................................................................................................................... 6
Lookup Tables.............................................................................................................................. 7
Pivot Tables.............................................................................................................................. 8
Educational Applications................................................................................................................. 9
Grade Book ................................................................................................................................ 10
Transcript template ................................................................................................................... 11
Financial Applications ................................................................................................................... 12
Annuities ................................................................................................................................... 13
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Loan Computations ................................................................................................................... 14

Compute the Payment........................................................................................................... 14
Protecting the Worksheet ..................................................................................................... 15
More Loan Functions ............................................................................................................. 17
Final Exercise ......................................................................................................................... 18
Amortized Loan Schedule.......................................................................................................... 19
Cash Flow .................................................................................................................................. 22
Forecasting ................................................................................................................................ 23
Three Month Moving Average .............................................................................................. 23
Statistical Analyses ........................................................................................................................ 24
Grade Analysis ....................................................................................................................... 24
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Add-ins....................................................................................................................................... 25
Descriptive Statistics .............................................................................................................. 27
Correlation ............................................................................................................................. 28
Regression.............................................................................................................................. 30
VBA in Excel................................................................................................................................... 31
References .................................................................................................................................... 32

Introduction
This workshop will introduce participants to the design of advanced applications in Excel. We shall look at
Educational applications, financial applications and engineering applications. In the financial applications, we
shall look at Loan Payments, Amortized loan schedules, cash flow, forecasting and much more.

Educational applications
Financial Applications
Statistical Analyses

Before you embark on this course, you may like to review some key concepts that will be in use in these
exercises:

Referencing
Lookup Tables

It may help to look at: http://www.cpearson.com/Excel/Topic.aspx. This exercise will help as well:
http://www.homeandlearn.co.uk/excel2007/excel2007s7p5.html
5

Referencing
It is important to understand the difference between relative and absolute cell referencing in Excel.
Relative referencing
In Relative referencing, cell addresses change in accordance with relative positions. Thus, if we have say a
formula in cell C1 [=A1+B1], then when the formula is copied into cell C2, the new formula becomes [=A2+B2]
to maintain the same relative positioning of the cells.
Absolute
In Absolute Referencing, we fix or anchor either the row or the column or both. Thus if as in the previous
example we had anchored both then copying the formula down will show [=$A$1+$B$1] and the value in c2
will be the sum of the values in A1 and B1.
A $ sign in front of the row or column indicates that it is fixed or anchored. Remember we can use the
function key F4 to change the absolute referencing.

Lookup Tables
In college, there is a grade scale
which maps scores to grades as in
the illustration shown.
Many a time you wish to lookup the
value of a score. For instance, a
score 0f 57 falls in the range 55-60
and would result in a grade of C-.
Set up the table as shown.
In this we would name the range
A1:B9 Grade_table.
Use the VLOOKUP function as
shown to return the result of the
input score in cell B13. Observe that the scores in the grade table are in ascending value.
7

Pivot Tables
A Pivot table is a way to extract data from a long list of
information and present it in readable form. Consider the table
al left. Now with the help of Excel, we can produce the
following:

Now we know for instance that Elisa scored 89 in Art in January.

Have a look at the original data in the table to confirm this.
You can follow the logic to produce this Pivot table by using this
link:
http://www.homeandlearn.co.uk/me/mes9p4.html
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Educational Applications
As one of the most used applications in the Office suite, Excel has a host of applications for education. In this
session, we shall look at some simple educational applications of which the Grade Book and Transcript stand
out. Both of these applications use the lookup table, range naming and absolute and relative referencing.
No doubt, teachers will find other applications as well as games that may be useful in teaching of various
concepts in the classroom.

Grade Book
In this exercise, you are required to set up a
grade book.
The same workbook must serve to record
attendances and absences.
During the course of the semester, students
are given assignments. There are ten
assignments in all and the scores from these
are used to determine the coursework mark
which is out of 30. There is a mid-semester
examination which contributes 20% of the
overall mark and a final which counts for
50%.
The grade book must automatically find the
final coursework mark and final grade.
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Transcript template
This template can be used to
produce a student transcript
including computation of the
Cumulative GPA. Students
need a CGPA of 2 in order to
graduate from college.
Typically, an Associate Degree
awarded after 22 courses each
with either 3 or 4 credits.

is

You will need to use a lookup

table in order to convert the
grades into GPs which are
used in the CumGPA
computation.
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Financial Applications
Let us now turn our attention to some common financial related spreadsheets such as loan management,
amortized loan schedules and cash flows.

Annuities
Loan Payment
Amortized Loan
Cash Flows
Forecasting
Trend Analysis
Acounts

You will need to familiarize yourself with the methods used by financial institutions for loans and loan
payments.
You would also need to look at what features Excel has in terms of the Financial functions which can help in
this regard.
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Annuities
This example is taken from:
http://www.tvmcalcs.com/calculators/excel_tvm_functions/excel_tvm_functions_page2
Suppose you are offered an annuity which will
pay you $1000 /annum for 10 years. If you can
earn 9% per year on a similar investment, how
much should you be willing to pay for this
annuity? How do you decide what is the Present
Value of this annuity?
Set up the spreadsheet as shown. If you want to
show the value in B5 as a positive number then
put a negative sign in front of the PV function.
Thus, you would have for B5 [=-PV(B3,B2,B1).
Use the URL shown above to explore other calculation options.
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Loan Computations
Suppose that we want to borrow a sum of money at a fixed interest rate over a period of time. Lets take it
that we are borrowing $100, 000 over 3 years and at an interest rate of 10%. Excel can tell us exactly what the
monthly payment on this loan is.
Set up the following spreadsheet:
Clearly the principal is the amount being borrowed, the interest is 10% and
we want to repay over 3 year so that the number of payments is 36.
Compute the Payment
Now to compute the monthly payment we can use the PMT function.
Examine the description of the PMT function.
The rate is the value in cell B4/12 as normally the rate is quoted as an
annual rate of interest. The number of payments NPER is the value in
B5 and the Present value of the loan which is the total amount that a
series of future payments is worth now, is the value in B3.
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If you wanted to arrange that there could be a number of payments

different from 12 per year as some people get paid bimonthly, then
you could have done the following:
In this case, the formula in B6 would be =PMT(B3/B4,B5,-B2).
Note that the bank uses the phrase Cost of Loan. If you work out
how much money you actually give the bank, it is $116,161.87. The
bank has imposed the sum of $ 16, 161.87 as the cost of
this loan. Of course, the bank has its own administrative
costs and so their own profit may be a fraction of this but
certainly you have paid a large sum over and above what
you wanted for the facility of having the loan and the use
of the goods at the present time.
Protecting the Worksheet
In this exercise, we shall protect the worksheet so that

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data can only be entered in the cells B3, B4 and B5. In this way, you can prepare templates for which only the
cells that require data entry can be modified. The cells that contain formulae are safe.
To do this:
1. Select the range B3:B5.
2. Go to the Home ribbon and open the Font dialog box
as shown in the illustration above.
3. In the Protection tab, uncheck the Locked option.
4. Go to Review > protect Sheet and ensure that only the
Select Unlocked cells option is checked.
5. Click OK
By default, all cells in an Excel worksheet are locked. This
makes it easy to protect all the data in a single worksheet or
workbook by applying the Protect Sheet or Protect Workbook
option.

16

To arrange for only specific cells to be used for data entry, we need to unlock these cells before applying the
Protect Worksheet command. It is a matter of taste but you could have highlighted the input cells before
protecting the sheet to help the user understand that this is where input is expected.
More Loan Functions
Apart from PMT, there are other Excel functions that can be used to look at different aspects of the loan: The
payment can be calculated for a given principal, interest rate and payback period, or given the other
parameters the number of periods may be returned. We can also compute the rate or the Present value based
on the other data. In short, Excel makes it easy to manage loans.
Function
PMT
PPMT
NPER
PV
IPMT

Description
Calculates the payment for a loan based on constant payments and a constant interest rate.
Returns the payment on the principal based on periodic constant payments and a constant interest
rate.
Returns the number of periods for an investment based on periodic constant payments, and a
constant interest rate.
Returns the Present value of an investment: the total amount that a series of future investments is
worth now.
Returns the interest payment for a given period of investment, based on periodic constant
payments and a constant interest rate.

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Final Exercise
Try putting it all together in the following manner:

The return values are shaded.

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Amortized Loan Schedule

In the last exercise, we saw how to manage a loan. Amortized loans are common in finance circles. In this type
of loan payments are made which reduce the principal so that the interest is reduced and at the end of the
loan schedule when the final payment is made the principal is reduced to zero incurring no further payments.
Normally there are 12 payments per year but we can arrange our spreadsheet so as to deal with amortized
loans with other payment options such as say 4 payments per year.
In the last exercise, we had to compute the cost of the loan apart. In this case, we want to report on the total
interest paid which will be the cost of the loan. We also want the specific return dates for payments as well as
the interest and the principal at that date. An amortization schedule then is simply a listing of each payment,
a breakdown of interest, principal and remaining balance. Lets see how we can arrange this. Use the previous
worksheet to start. In this exercise, you will need to be able to use the absolute referencing which has been
described above. The following exercise is taken from TVMCalcs.com.
Set up the following:

19

The first principal for Month 0 is $ 100, 000 which is the value in cell B2 so set cell D9 as =B2.
Use the Data Fill to list the months 0..30 in
the Month column as shown:

20

Follow the suggestions on the page http://www.tvmcalcs.com/calculators/apps/excel_loan_amortization

to make your work look a bit more fancy.
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Cash Flow
A Cash Flow shows money in and money out. This can have a marked effect on the success of the business.
You have to make sure that you never go broke!!! Read the article Manage Your cash Flow at:
http://office.microsoft.com/en-us/excel-help/manage-cash-flowHA010066238.aspx?CTT=5&origin=HA010066228
Browse to the URL;
http://office.microsoft.com/en-us/excel-help/cash-flow-management-HA010066228.aspx
Download the Small Business Cash flow template. This will save you the trouble of creating one and is really
helping with the efficiency of the operation as well.
Populate the cash flow template with sample data and examine the cash flow as well as the chart.

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Forecasting
Create the spreadsheet as shown in the illustration. Use the Auto Fill handle to
compete the months. Input the demand figures:
Three Month Moving Average
Format the averages in column C so
that they appear with zero decimal
places as shown.

23

Statistical Analyses
Grade Analysis
Load the file CXC04 which contains the
grades obtained for the 2004 CXC
examinations. Create the pivot table as
shown in the illustration.
Looking at the table, which subject has the
best results?
Which subject has the poorest results?
What proportion of the students have
achieved a passing grade 1, 2 or 3?

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Add-ins
In many statistical analyses, you will
find that you will need the Analysis
Toolpak. This is not installed by
default.
Load the file entrance-exam.xls from
the files folder. This file contains
scores in the entrance examination
from the University College. Scores
are reported for each case in two
areas: English and Mathematics. We
may be interested in doing some
analyses of these results.

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From the Office button, launch Excel options> Go to Excel Add-ins.

Highlight the Analysis Toolpak and press GO. In the Add-ins dialog box,
check at least Analysis Tookpak. If you like you can check the others as
well as in the illustration shown. Press OK. Microsoft Office will install the
additional files necessary for the analyses.

Now you are ready to go!!

Set up a correlation between the two sets of data to
see whether it follows that a student who did well in
English would also do well in mathematics.
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Descriptive Statistics
Load the file and select the English scores.
From the data tab, ask for the Descriptive
Statistics.
The Descriptive statistics provides you with
the measures of central tendency, standard
deviation and sample variance for the data.
Do the same for the Mathematics scores and
compare the results.
Finally, try filtering the data by district and
doing the same.
Comment on your results.

27

Correlation
Load the file entrance-exam which contains data
the Entrance Examination for students in the
University College.

on

We want to see if there is any correlation

between the English and Mathematics scores for
this Entrance examination.
Select Data Analysis from the Data Ribbon and
then Correlation from the Tools.
As the input range select $B2:$C$223. Notice that
this range includes rows for which there is missing
data. Use $E$1 as the output range.
Compute the correlation based on this data. The
correlation for these data is 0.623548.
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If the data file is cleaned by removing all the rows which

contain missing values then the correlation is 0.623574.
Now we are left wondering whether there is any
relationship. Clearly there is but it is not as strong as we
would have liked.

Use this page

http://faculty.vassar.edu/lowry/ch4apx.html
to compute the probability of the computed coefficient and comment on the result.
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Regression
Use the cleaned data and
perform a regression.
Use mathematics as the Y
or dependent variable
and the English scores as
the independent or X
variable.
Observe that the Multiple
R at 62% compares well
with the correlation. Rsquared itself which
measures the amount of explained variation is very low at 38% and it appears that there is a significant
dependence. Still we are left wondering.
Try this for each district separately.
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VBA in Excel
We can program macros in Excel using VBA.
Browse to the URL: http://www.excel-vba.com/

31

References
http://www.exceltip.com/excel_tips/Excel_Financial_Formulas/110.html
http://www.youtube.com/watch?v=3RXBQKLp4vk&feature=related
http://www.tvmcalcs.com/calculators/apps/excel_loan_amortization
http://www.homeandlearn.co.uk/excel2007/excel2007s8p3.html

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Index
Analyses, 5, 24
Cash Flow, 3, 22
CXC, 9, 24
examinations, 9, 24

GPA, 2, 9, 11
interest, 14, 17, 19
Moving Average, 23
template, 11, 22

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