BusM 401
Prof. Nadauld
Computer Lab #1
Financial Functions in Excel
Introduction:
This computer lab will be mostly selfguided.
You can work at your own pace, so
those who have a lot of experience with Excel might finish relatively quickly, and those who have
less experience might take longer.
By the end, everyone should know the basics of financial
functions in Excel.
Some of these problems you could solve more quickly using your financial
calculator, but the purpose of this exercise is to learn financial functions in Excel.
If you need
help, ask Prof. Nadauld, ask the TA, or consult the Excel help function.
Getting Started:
Download today’s lab from Blackboard.
Under computer labs select Computer
lab #1.
Answers to the problems are given on the last sheet in the workbook, so you can check
your answers.
Full solutions are also available on Blackboard, but I recommend not looking at
them until you’ve tried your best to solve the problems on your own.
Instructions:
Problem #1 – Discounting a single cash flow
Inputs from the problem (given on spreadsheet) go in the yellow boxes.
You will then solve for
the (same) answer using two different methods in the green boxes.
The first method is using a formula.
Recall that formula for a single cash flow is PV=CF/(1+r)^n,
where CF is the cash flow, r is the discount rate, and n is the number of periods.
You should
reference the yellow input cells to get the answer.
The second method is using Excel’s PV function.
Access this function under Formulas  Insert
Function.
When you bring up the PV dialog box, instructions will guide you on how to complete
the function.
Note that the PV function works very much like your financial calculator.
Q1:
What is the present value of the bonus?
_______________
Problem #2 – Annuity
This problem is based on the first newspaper article.
Initially assume an 8% discount rate.
Enter
the inputs in the yellow boxes, and then solve for the present value of an annuity in two ways.
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 Winter '10
 ToddMitton
 Net Present Value

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