Excel Exercise #7: Cost-Benefit Analysis

1. Enter the information in the spreadsheet below. Be sure that the information is entered in the
same cells as given, or the formulas will not work. The information is the stream of the costs and
benefits (in millions) estimated for a proposed city baseball stadium. Year 0 represents the initial
investment while costs for years 1-10 are the maintenance costs incurred at the end of the year.
The benefits are the revenues from sport team contracts and revenues at the end of the year.

A B C D E F
1 Costs-Benefit Analysis: City Stadium
2 Total Discount Present
3 Year Costs Benefits Benefits Factor Value
4 0 60 0
5 1 1 3
6 2 1 3
7 3 1 10
8 4 1 10
9 5 1.5 12.5
10 6 1.5 12.5
11 7 1.5 12.5
12 8 1.5 15
13 9 2 15
14 10 2 15
15
16 NPV=
17 Discount
18 Rate=

2. Highlight the cell range B4:D14. Open the FORMAT menu, select CELLS Select the category
CURRENCY, select the format $1,234.10. Repeat this procedure for the cell range F4:F16.
3. Highlight cell B18. Open the FORMAT menu, select CELLS Select the category PERCENT, select
two decimal places.
4. To determine the desirability of the project from an efficiency criterion, first calculate the Total
Benefit for each year of the project. To do this, enter the following formula.

D4: =c4-b4
5. Copy the formula in cell D4 to the cell range D5:D14.
6. We must next discount future costs and benefits to put them into todays value (i.e., find the
present value). First, enter the following value for the discount rate (a 10% discount rate).

B18: 0.1

7. Second, calculate the discount factor for each year. Enter the following formula.

E4: =1/(1+$b$18)^a4
8. Copy the formula in cell E4 to the cell range E5:E14.
9. Third, multiply the total benefit for each year by the discount factor for each year. Enter the
following formula.

F4: =d4*e4
10. Copy the formula in cell F4 to the cell range F5:F14
11. Find the Net Present Value. Add together the Present Values for each year. Enter the following
formula.

F16: =sum(f4:f14)
Note: Steps 9-11 could be accomplished with one simple formula:
=sumproduct(d4:d14,e4;e14)
12. Change the discount rate and see what happens to the Net Present Value of the Value of the
stadium project. With the discount rate of 7% or below, the project would be cost effective.
13. Enter the following information.

A20: Shortcut:
A21: NPV =
A22: IRR =
14. An easy way of calculating net present value can replace steps 7-12. Excel has a net present
value function as follows: =NPV (rate, value1, value2,)
This function assumes that each value occurs at the end of consecutive years (I.e,.. year 1, year
2, year 3,). Since any initial investments (i.e., costs) occur at the beginning of the project ad not
at the end of the year 1, the initial costs are added onto the result returned by the NPV function.
For this exercise enter the following information.

B21: =npv(b18,d:5d14)+d4
15. A usual piece of information for a cost-benefit analysis is the discount rate that returns a net
present value of $o. this can be obtained with the IRR function a follows:
=IRR (values)

For this exercise enter the following formula.

B22: =irr(d4:d14)
 Your completed spreadsheet should look like the one below.

A B C D E F
1 Cost-Benefit Analysis: City Stadium
2 Total Discount Present
3 Year Costs Benefits Benefits Factor Value
4 0 $60.00 $0.00 ($60.00) 1.00 ($60.00)
5 1 $1.00 $3.00 $2.00 0.91 $1.82
6 2 $1.00 $3.00 $2.00 0.83 $1.65
7 3 $1.00 $10.00 $9.00 0.75 $6.76
8 4 $1.00 $10.00 $9.00 0.68 $6.15
9 5 $1.50 $12.50 $11.00 0.62 $6.83
10 6 $1.50 $12.50 $11.00 0.56 $6.21
11 7 $1.50 $12.50 $11.00 0.51 $5.64
12 8 $1.50 $15.00 $13.50 0.47 $6.30
13 9 $2.00 $15.00 $13.00 0.42 $5.51
14 10 $2.00 $15.00 $13.50 0.39 $5.01
15
16 NPV = ($8.11)
17 Discount
18 Rate = 10.00%
19
20 Shortcut:
21 NPV = ($8.11)
22 IRR = 7.398%

16. Save the spreadsheet: A:CBASTAD.XLS

Excel Exercise#8: Consolidating and Linking Spreadsheets

1. Enter the following information onto Sheet 1. Double click on the tab or the worksheet and
rename it: East. (It represents sales in$1000.)

A B C D E F

1 1997 Record Sales: East Store

2 First Second Third Fourth Annual

3 Quarter Quarter Quarter Quarter Total

4 Pop 254 290 198 354

5 Soul 154 184 154 290
6 R&B 290 320 287 456

7 Country 345 361 258 524

8 Classical 45 52 12 98

9 Soundtracks 75 125 157 185

10 Children 26 19 15 56
11 Total
 2. Enter the following information onto Sheet2. Double click on the tab the worksheet and rename
it: West.

A B C D E F

1 1997 Record Sales: East Store

2 First Second Third Fourth Annual

3 Quarter Quarter Quarter Quarter Total

4 Pop 254 290 198 354

5 Soul 154 184 154 290
6 R&B 290 320 287 456

7 Country 345 361 258 524

8 Classical 45 52 12 98

9 Soundtracks 75 125 157 185

10 Children 26 19 15 56
11 Total

3. Enter the following row and column labels onto Sheets 3 and 4. Rename Sheet3: Consolidate.
Rename Sheet4: Link.
A B C D E F
1 1997 Record Sales: Combined Sales
2 First Second Third Fourth Annual
3 Quarter Quarter Quarter Quarter Total
4 Pop
5 Soul
6 R&B
7 Country
8 Classical
9 Soundtracks
10 Children
11 Total
 4. Highlight the cell ranges B4:F11. Open the FORMAT menu, select CELLS, select CURRENCY, and
select $1,234. Click on OK. Do this for both the East and West worksheets.
Enter the following formulas in the appropriate cells on both the East and West worksheets.

B11: =sum (b4:b10)

Copy the formula in cell B11 to cells C11 through F11.

F4: =sum (b4:e4)

Copy the formula in cell F4 to cells F5 through F10.

5. Add other worksheets to your spreadsheets as the exercise has you using four worksheets.
Open the INSERT menu, select WORKSHEET. A new worksheet label Sheet4 should be added to
your spreadsheet.
6. Click on the tab Consolidate to make it the active worksheet. Open the DATA menu, select the
option CONSOLIDATE.
a. Under the Reference option enter the following: East!b4:f11
Then click on ADD. This refers to cells B4:F11 on worksheets East.
b. Under the Reference option enter the following: East!b4:f11
Then click on ADD. This refers to cells B4:F11 for both East and West worksheets should be
entered in the All References box.
c. Click OK.

The worksheet Consolidate should now report the sum of the East and West store sales for each
category on music by quarter.

Your worksheet Consolidate should look like one below.

A B C D E F
1 1997 Record Sales: Combined Sales
2 First Second Third Fourth Annual
3 Quarter Quarter Quarter Quarter Total
4 Pop $408 $457 $340 $599 $1,804
5 Soul $319 $308 $379 $554 $1,560
6 R&B $477 $415 $541 $778 $2,211
7 Country $546 $571 $600 $936 $2,653
8 Classical $57 $73 $30 $152 $312
9 Soundtracks $117 $159 $222 $287 $785
10 Children $46 $35 $35 $101 $217
11 TOTAL $1,970 $2,018 $2,147 $3,407 $9,542

7. Click on the tab for LINK to make this the active worksheet. Click on the white box to the left of
Create links to source data. Follow the steps a.-c. laid out in step 5 above.

Your Link worksheet should look like one below.

A B C D E F
1 1997 Record Sales: Combined Sales
2 First Second Third Fourth Annual
3 Quarter Quarter Quarter Quarter Total
6 Pop $408 $408 $340 $599 $1,804
9 Soul $319 $308 $379 $554 $1,560
12 R&B $477 $415 $541 $778 $2, 211
15 Country $546 $571 $600 $936 $2,653
18 Classical $51 $73 $30 $152 $312
21 Soundtracks $117 $159 $222 4287 $785
24 Children $46 $35 $35 $101 $217
27 Total $1,970 $2,018 $2,147 $3,407 $9,542

8. The difference in this second merged worksheet is that after it is created, any changes in the
East and West worksheets will be updated on the link worksheet. Modify some of the figures on
the East or West worksheet and see how the numbers on the Link worksheet are updated but
the numbers on the consolidate worksheet are still the same.

Using ChartWizard to Create a Chart for the Total Annual Sales:

9. Create a pie chart using the Annual Totals from the Link worksheet. Create a chart for the total
combined annual sales as reported on the Link worksheet. Since the two columns of information
you are to use for this chart are not next to each other, the cell ranged to be graphed must be
highlighted in the following manner. Click on cell B4 and drag the cursor to cell B10 (the range
B4:B10 should now be highlighted). Release the left mouse button and move the cursor to cell
F4. Before you click the left mouse button on cell F4, press and hold down the CTRL on your
keyboard. Now you are ready to highlight the cell range F4:F10. If you try to select the cell range
F4:F10 without simultaneously holding down the CTRL key, the first range of cells will no longer
be selected.)
10. Open the INSERT menu. Select the CHART option.
11. Responds as follows to the steps in ChartWizard as prompted.
 Step 1: Chart Type
Select Pie. A set of pie chart should appear on the screen. Click on the left most pie chart
in the top row. Once you have selected the type of pie chart you would like, click on
NEXT.

Step 2: Chart Source Data

If the cell ranges for the data and series source are correct, then click on NEXT Step 3:

Step 3: Chart Option

a. With the tab Titles highlighted, type in the following information next to each of
the title options.
Chart title: Total Company Annual Music Sales: 1997
b. Click on the Legend tab. Since one variable is graphed, turn off the legend. Click on
the check mark to the left of the Show Legend option. The check mark should
disappear.
c. Click on the Data Labels tab. Why dont we show the category labels and percent
of each category above right on the chart. Point the cursor arrow to the empty circle
to the left of Show label and percent and click.
d. After you have selected the chart options you want, click on NEXT.

Step 4: Chart Location

Click on the empty circle to the left of the As new sheet option. The text bar to the
right of this option with a word Chart 1 should now be highlighted. Give the sheet that
the chart will appear on a more descriptive label. Type Total Pie and click on FINISH.

Your chart should look like the one on an attached page.

12. To return to your worksheet, click on the tab at the bottom of the screen labeled Link. Modify
some of the data on the West worksheet. There has been an accounting error which resulted in
the music sales for the Pop category to have been underreported by $100,000 each quarter.
Enter the following data into the West worksheet.

B4: 254
C4: 267
D4: 242
C4: 345
Notice how the combined figures on the Link worksheet have been updated. Now click on the tab Total
Pie to view the pie chart. The chart that was created off the Link worksheet has also been updated.
Before the data change in step 12 was entered, Pop music accounted for 19% of all company sales, now
it accounts for 22% of all music sales.

13. Import this chart into Microsoft Word document. Create the memo on the next page. Return to
the Excel document and click on the tab Total Pie to make this the active worksheet. Click on the
pie chart. Click on the Copy button on the tool bar. Access the memo you created in Microsoft
Word. Open the EDIT menu, select PASTE SPCIAL, click on the empty white circle next to
Paste Link, and select PICTURE from the options in the middle of the Paste Special window.
The chart should appear on you spreadsheet like the one below.
14. Modify some of the data in the original East worksheet (in Excel). You will notice that not only is
the Link worksheet automatically updated to reflect these changes, but so is the pie chart you
have exported to your Word memo.
15. Save your spreadsheet with the name A:CONSOLID:XLS
Numbers Accounting Inc.
Knoxville, TN

MEMORANDUM

DATE: Today
TO: MR. C. E. Oliver
FROM: You
RE: 1997 Annual Sales

Your company has had another excellent financial year. Listed below is a chart that provides the
total 1997 annual sales for both stores.

If you request additional information, please do not hesitate to contact us.

 Numbers Accounting Inc.
Knoxville, TN

MEMORANDUM
Date: Today
To: Mr. C. E. Oliver
From: You
Re: 1997 Annual Sales

Your company has had another excellent financial year. Listed below is a chart that provides the total
1997 annual sales for both stores.

Total Company Annual Music Sales: 1997

Children
Pop
Soul
R&B
Country
Classical

If you request additional information, please do not hesitate to contact us.

 EXEL EXERCISE #9: Using Analysis Tools

Estimating the Regression Equation:

1. Enter the information in the worksheet below.

A B C D
1
2 U.S. POPULATION
3 Year Var. YEAR Actual
4 0 1900 77
5 1 1910 92
6 2 1920 106
7 3 1930 122
8 4 1940 128
9 5 1950 150
10 6 1960 178
11 7 1970 204
12 8 1980 224
13 9 1990
14 10 2000
15 11 2010
16 12 2020
17 13 2030

2. To use the regression tool in EXCEL, open the TOOLS menu, select the DATA ANALYSIS option,
select the REGRESSION tool (you may have to scroll down in the list of analysis tools until
regression appears), and click on OK. (If the DATA ANALYSIS option is not listed towards the
bottom of the TOOLS menu, select the ADD-INS option. Click on the empty to the left of
Analysis Tool Pak and click on OK.)
3. Enter the following information in the spaces indicated:
Input Y Range: c4:c12
Input X Range: a4:a12
Be sure the under the Output Options the New Worksheet Ply option is selected. Click on OK.
After a few moments the following sheet labeled Sheet4 should appear containing the results of
the regression analysis.
 A B C D E F G H I
1 SUMMARY OUTPUT
2
3 Regression Statistics
4 MultipleR 0.987171
5 R Square 0.974507
6 AdjustedR
7 Standard Error 8.6498
8 Observation 9
9
10 ANOVA
11 df SS MS F SignificanceF
12 Regression 1 20020.27
13 Residual 7 523.7333
14 Total 8 20544
15
16
17
18
19
20
21

Projecting Future Values:

4. Copy the regression coefficients onto the sheet with the actual population data. To do this,
highlight the cell range A17:B18 and click on the COPY button. Now, select Sheet 1 (by clicking
on its tab at the bottom of the worksheet) and paste the information into cell F4. To copy the R2
value onto the data sheet, click on the tab labeled Sheet 4 (where the regression results are)
and copy the cell range A5:B5. Click on the Sheet 1 tab and paste the information into cell F6.
5. Enter the following labels in the cells as indicated:
F3: Regression results:
D3: Projected
6. Enter the following equation into cell D4: =$g$4+$g$5*a4
7. Copy the formula into the cell range D5:D17. Format these numbers by selecting the 0.00
number format. These are your projected values based on the regression analysis. Your
worksheet should look similar to the one below.
 A B C D E F G
1
2 U.S. POPULATION
3 Year Var. YEAR Actual Projected Regression results:
4 0 1900 77 69.27 Intercept 69.26667
5 1 1910 92 87.53 X variable 18.26667
6 2 1920 106 105.80 R Sqaure 0.974507
7 3 1930 122 124.07
8 4 1940 128 142.33
9 5 1950 150 160.60
10 6 1960 178 178.87
11 7 1970 204 197.13
12 8 1980 224 215.40
13 9 1990 233.67
14 10 2000 251.93
15 11 2010 270.20
16 12 2020 288.47
17 13 2030 306.73

8. Highlight the rangeB3:D17. Open the INSERT menu, select CHART. The following steps will guide
you through using the Chart Wizard.

Step 1: Chart Type

Select Line. Select Line with markers displayed at each data value (the left most selection in
the second row of chart sub-types). Once you have selected the type of line chart, click on NEXT.
Step 2: Chart Source Data
If the cell range for the data and the series source are correct, then click on the Series tab.
Next, click on the blank area to the right of Category (X) axis labels. Type in the following worksheet
reference:
=sheet!b4:b17
This commands indicate that the labels for the X (i.e., the years of the data) are found on Sheet 1 in the
cell range B4:B17. Click on NEXT.
Step 3: Chart Options
With the tab Titles highlighted, type I the following information next to each of the title
options.
Chart Title: Projection of U.S. Population
Category X Axis: Year
Category Y Axis: Millions
Click on NEXT.
Step 4: Chart Location
Click on the empty circle to the left of the As new sheet option. The text bar to the right of this
option with the word Chart1 should now be highlighted. Give the sheet that the chart will appear on a
more descriptive label. Type Forecast Chart and click on FINISH.

Your chart should look like the one on an attached page.

9. To clean tidy your worksheet up, rename CHART1 as Projection, rename CHART2 as Residuals,
rename SHEET4 as Regression, and rename SHEET1 as Data. Now Save your file with the name
A:USPOP.XLS
Excel Exercise #10: Statistical Analysis

1. Enter the data for URBAN (percent living in urban area), MURDER (murders per million
residents), ROBBERY (robberies per million residents), POLICE (police employees per 100,000
population), and REGION for 50 states that are presented on the attached page. Label the sheet
DATA.
2. Copy the data in A1:B52 (STATE and MURDER) onto the same cells on Sheet2. Perform the steps
3 through 22 below on Sheet2. Label the Sheet UNIVARIATE.

Variance and Standard Deviation

3. Calculate the variance for MURDER by breaking down the formula (Xi-Xbar)2/(N-1), where Xbar is
the mean, Xi is each case of the variables, and N is the number of cases. Enter the following
labels in the appropriate cells.
A54: Mean =
A55: N=
A57: Variance=
A58: Std Dev=
C2: (Xi-Xbar)
D2: (Xi-Xbar)2

4. Enter the following formulas.

B54: =average (b3:b52)
B55: =count(b3:b52)

5. Enter the following formula.

C3: = b3-$b$54

6. Copy the formula in cell C3 into cells C4 to C5.

7. Enter the following formula.
D3: =c3^2

8. Copy the formula in cell D3 into cells D4 to D52.

9. Enter the following formula.
D54: =sum(d3:d52)
This is the sum of the squared deviations, or the numerator for the variance equation in step 3
above. (Note: steps 5 and 6 could be accomplished with the function:
=sumproduct(c3:c5, c3:c52)
10. Enter the following formula to calculate the variance for the variable MURDER.
B57: =d54/(b55-1)

11. The standard deviation is simply the square root of the variance which can be calculated with
the following formula.
B58: =sqrt(b57)

Skewness and Kurtosis

12. Enter the following labels into the cells indicated below
A59: Skewness=
A60: Kurtosis=
E2: (Xi-Xbar)3
F2: (Xi-Xbar)4

13. Enter the following formula.

E3: =c3^3

14. Copy the formula in cell E3 into cells E4 to E52.

15. Enter the following formula.
F3: =c3^4

16. Copy the formula in cell F3 into cells F4 to F52.

17. Enter the following formula.
E54: =sum(e3:e52)
F4: =sum(f3:f52)

18. Enter the following formulas.

B59: =(b55/(b55-1)*(b55-2)))*(e54/(b58^3))
B60: =(((b55*(b55+1))/((b55-1)*(b55-2)*(b55-3)))*(f54/(b58^4)))-((3*(b55-1)*(b55-1))/((b55-
2)*(b55-3)))

The completed worksheet should look similar to the one below.

 A B C D E F
1 State Crime Data Set
2 STATE MURDER (Xi-Xbar) (Xi-Xbar)2 (Xi-Xbar)3 (Xi-Xbar)4
3 AL 132
4 AK 97
5 AZ 103
6 AR 92
7 CA 143
8 CO 69
9 CT 47
10 DE 69
11 FL 145
12 GA 138
13 HI 87
14 ID 31
15 IL 106
16 IN 89
17 IA 22
18 KS 69
19 KY 88
20 LA 157
21 ME 28
22 MD 95
23 MA 41
24 MI 102
25 MN 26
26 MS 145
27 MO 111
28 MT 40
29 NE 44
30 NV 20
31 NH 25
32 NJ 69
33 NM 131
34 NY 127
35 NC 106
36 ND 12
37 OH 81
38 OK 51
39 OR 51
40 PA 68
41 RI 44
42 SC 114
43 SD 7
44 TN 108
 45 TX 169
46 UT 38
47 VT 22
48 VA 86
49 WA 55
50 WV 71
51 WI 29
52 WY 62
53
54 Mean= 77.24 Sum= 88755.12 1000676 2.28E+08
55 N= 50 Sum= 88755.12
56
57 Variance= 1811.329
58 Std Dev= 42.55971
59 Skewness= 0.27595
60 Kurtosis= -0.88334

Descriptive Static Shortcut:

19. Enter the following Labels.
A63: Shortcuts:
A64: Min.=
A65: Max=
A66: Mode=
A67: Median=
A68: Mean=
A69: Variance=
A70: Std. Dev
A71: Skewness=
A72: Kurtosis=

20. Enter the following formulas.

B63: =min(b3:b55)
B65: =max(b3:b55)
B66: =mode(b3:b55)
B67: =median(b3:b55)
B68: =mean(b3:b55)
B69: =var(b3:b55)
B70: =stdev(b3:b55)
B71: =skew(b3:b55)
B72: =kurt(b3:b55)
 This part of the worksheet should now look like below.

A B
63 Shortcut:
64 Min= 7
65 Max= 169
66 Mode= 69
67 Median= 70
68 Mean 77.24
69 Variance= 1811.329
70 Std Dev= 42.55971
71 Skewness= 0.27595
72 Kurtosis= -0.88334

Frequency Distribution

21. Create a frequency distribution for the variable MURDER. Enter the following into the cells
indicated below.
H3: 50
H4: 100
H5: 150
H6: 200
I3: 0-50
I4: 51-100
I5: 101-150
I6: 151-200
I7: Total
J2: Frequency

22. To create a frequency distribution you must enter an array formula (a formula that is entered to
an array of cells.) the intervals for the distribution are in cells I3 to I6. The upper value in the
range for each interval is I listed in cells H3 to H6. The format of the frequency function is:
=FREQUENCY(data_range,Interval_range)

To enter an array formula, highlight the cells into which the frequency distribution will be
located. In this case, highlight the cells J3 to J6. Type the following formula (but do not press
ENTER when you finish).
=frequency(b3:b52,h3:h6)
 After you finish typing in the formula press the following three keys simultaneously:
CONTRO, SHIFT, and ENTER.
The frequency for each interval should appear in the cells J3 to J16.

23. To complete the frequency distributions enter the following formula.

J7: =sum(j3:j6)

Your frequency distribution should now look like the one below.

H I J
2 Frequency
3 50 0-50 16
4 100 51-100 18
5 150 101-150 14
6 200 151-200 2
7 Total 50
8

Bivariate Statistics

24. Return to the Data sheet and copy cells A1:A52, D1:E52. Paste this data for the Variables STATE,
POLICE, and ROBBERY into cells A1:C52 on Sheet3. Label this sheet BIVARIATE.
25. Calculate a Persons product moment correlation coefficient (r) for the variables ROBBERY and
POLICE by breaking down the formula for Persons which is:

R= ((Yi-Ybar) (Xi-Xbar)/(N-1)2/( (Xi-Xbar)2 /(N-1))((Yi-Ybar)2/(N-1))

26. Enter the following labels.

A54: N=
A55: Mean=
A56: Std Dev=
A58: Covar XY=
A59: Var X=
A60: Var Y=
A61: Person r=
E2: (Xi-Xbar)
 F2: (Yi-Ybar)
G2: (Yi-Ybar) (Xi-Xbar)
H2: (Xi-Xbar)2
I2: (Yi-Ybar)2

27. Enter the following formulas.

B54: =count (b3:b52)
B55: =average(b3:b52)
B56: =stdev(b3:b52)
C54: =count(c3:c52)
C55: =average(c3:c52)
C56: =stdev(c3:c52)
E3: =b3-$b$55

28. Copy the formula in cell E3 to cells E4 to E52.

29. Enter the following formula.
F3: =c3-$c$55

30. Copy the formula in cell F3 to cells F4 to F52.

31. Enter the following formula.
G3: =e3*f3

32. Copy the formula in cell G3 to cells G4 to G52.

33. Enter the following formula.
H3: =e3^2

34. Copy the formula in H3 to cells H4 to h52.

35. Enter the following formula.
I3: =f3^2

36. Copy the formula in cell I3 to cells I4 to I52.

37. Enter the following formulas.
B58: =sum(g3:g52)/(b54-1)
B59: = sum(h3:h52)/(b54-1)
B60: = sum(i3:i52)/(b54-1)
B61: = sum(B58^2)/(b59*B60)
38. Your completed worksheet should look like below.