Excel Formulas vs. Functions – Auto Loan Calculator (PMT)
If you are like me, you are using terms Excel Formulas and Functions interchangeably. However, these expressions represent distinctly different concepts. We can think of a formula as a statement that returns results of a certain user-defined calculation. Formulas can contain values (numeric, date, text,) cell references, ranges of cells, named ranges; they can perform any mathematical operation (addition, subtraction, multiplication, division, exponentiation,) as well as evaluate results of Excel’s built-in functions…A function is a predetermined formula that helps us simplify complex procedures and operations. For example, great folks at Microsoft programmed different functions that allow us to sum a group of numbers, search for a specific word within a text string, determine current date and time, or even figure out amount of our loan payment. Ability to construct complex Excel formulas , using multiple Excel functions is one of the prerequisites for becoming an Excel expert. Formulas always start with the equal sign ( = ), and we always enclose functional arguments (if any) inside parentheses.
Let’s suppose that you need to calculate auto loan payment for your dream car – 2015 Ford Mustang GT. According to TrueCarPrice , for the base V8 model, you should expect to shell out $ 32,864 of your hard-earned dollars for this car; if you reside in the state that Ford Motor Company calls home. This price is comprised of $ 29,612 true value estimate, $ 567 market premium, $ 825 delivery charge, and state sales tax. According, to Bank Rate, you can realistically finance this purchase with a 3% interest rate loan. Since you just received your Holiday bonus, you want to put it towards a $5,000 down payment on your new car. Let’s calculate your monthly car payment using both: formula method without utilizing Excel functions: =P*i*(1+i)^n/((1+i)^n-1) , as well as through a formula incorporating Excel’s PMT function. Both of these methods rely on formulas to perform the necessary calculations, but only the second method makes use of an Excel function.
Highlights of Gary Cokins Business Analytics seminar
Last month I attened Business Analytics seminar by “an internationally recognized expert, speaker, and author in performance improvement systems and cost management” : Gary Cokins.
My slideshare presentation in the bottom of this post summarizes Gary’s informative and thought-provoiking presentation. In fact, some statements in this post were provoked by this seminar. Gary started by quoting Jeanne X. Harris :“40% of important decisions are not based on facts but rather on intuition, experience, and anecdotal evidence.” Arguably, we could improve the world by basing our decisions on facts, and making better decisions in the process. In addition, better decisions result in better actions, saving us time, effort, money, and other resources. The “actions” part is really important in terms of differentiating Business Analytics from Business Intelligence.
Solving ModelOff Data Analysis problem using Microsoft Access SQL.
Last week we solved ModelOff’s Data Analysis problem from their 2013 championship. Since the second round of 2014 Model Off competition takes place this Saturday, November 8th, let’s pay respect to the data superheroes making it thus far. Our previous ModelOff solution involved using PivotTable feature of Microsoft Excel. Would you believe that we can realistically conceive a solution to the Data analysis problem, using Microsoft Access, or even better, Microsoft’s flavor of the SQL language?
I am as big of an Excel fan as the next guy, much bigger, actually, on the second thought. However, I also believe that when possible, using the right tools for the job will yield better, faster results, than duct-taping your workarounds. So, why Access? Why on Earth, SQL? Well, let’s go to the source: ” If you often have to view your data in a variety of ways, depending on changing conditions or events, Access might be the better choice for storing and working with your data. Access lets you use Structured Query Language (SQL) queries to quickly retrieve just the rows and columns of data that you want, whether the data is contained in one table or many tables. You can also use expressions in queries to create calculated fields.”
Solving ModelOff Data Analysis problem from the second round of 2013 competition.
As some of you might know, Model Off 2014, championship kicked off last Saturday, October 25th. With the first round of this modeling competition behind us, I thought that this might be a good time to tackle one of their older problems. I might be biased here, but starting with their Data Analysis problem made a perfect sense to me. Luckily enough, this could arguably be one of the easiest problems they have ever presented. You can download both: Questions/Answers worksheet and Excel workbook with source data for this problem directly from their website.
As usual, I will not pretend to have the best possible, optimal solution, I simply offer one which works. Since in the real world, we are not constrained by challenging time restrictions, imposed on ModelOff contestants, I was not concerned about the most efficient solution, but rather the one that is more presentable. As an example, my solution heavily relies on Top Ten filtering feature available for PivotTables, this might seem like an extra step comparing to simply presenting all records and then sorting them in order of preference. In my humble opinion this is a better way to present top 1/3/5/n results, rather than looking at extra records of data.