Recitation I
9/2003
Analysis with Excel
1, NPV
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Discount rate
$ 1 today, interest rate is 5%, how much is this amount worth next year?
$1  (1  0.05)  $1.05
$ 1.06 a year later, discount rate is 6%, how much is that future amount worth for now?
$1.06
 $1
1  0.06
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Calculate NPV with Excel
Excel Function - NPV(discount_rate,value1,value2, ...)
Note: The NPV investment begins one period before the date of the value1 cash flow and
ends with the last cash flow in the list. The NPV calculation is based on future cash flows.
So if we invest at present, the NPV is
NPV(discount_rate, cash_flow_1,cash_flow_2, …) – Investment
2, Data Table
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Example
How to plot the discount rate (from 1% to 10%) vs. NPV, for 3 time frames (4 years, 8
years, 12 years)?
Need to calculate NPV 30 times… But, wait.
We have an Excel tool called Data Table!
Tao Wang
1
Recitation I
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9/2003
Create a one-variable data table
Step 1: Type the list of values you want to substitute in the input cell either down one
column or across one row.
Step 2: If the input values are listed down a column, type the formula in the row above the
first value and one cell to the right of the column of values. Type any additional formulas
to the right of the first formula. (If the input values are listed across a row, type the
formula in the column to the left of the first value and one cell below the row of values.
Type any additional formulas below the first formula.)
Step 3: Select the range of cells that contains the formulas and values you want to
substitute.
Step 4: On the Data menu, click Table.
Step 5: If the data table is column-oriented, type the cell reference for the input cell in the
Column input cell box. (If the data table is row-oriented, type the cell reference for the
input cell in the Row input cell box..)
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Try to get the squares of 1, 2, 3, 4, 5, 6 all at once….
3, Lookup
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Functions
Search for values in columns,
VLOOKUP(lookup_value,table_array,col_index_num,range_lookup)
Search for values in a rows,
HLOOKUP(lookup_value,table_array,row_index_num,range_lookup)
The values in the first column of table_array must be placed in ascending order
Col_index_num is the column number in table_array from which the matching value must
be returned. A col_index_num of 1 returns the value in the first column in table_array; a
col_index_num of 2 returns the value in the second column in table_array, and so on.
Range_lookup is a logical value that specifies whether you want VLOOKUP to find an
exact match or an approximate match. If TRUE or omitted, an approximate match is
returned. In other words, if an exact match is not found, the next largest value that is less
than lookup_value is returned. If FALSE, VLOOKUP will find an exact match. If one is
not found, the error value #N/A is returned.
Tao Wang
2
Recitation I
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9/2003
Usage
It is useful for Ex 1 to 6. When you change the capacity and volume of the plant, you
may want to have the spreadsheet automatically change the cost associated with the
capacity and volume.
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Try to get a square with the table established…
4, Dry Press Cost Model
Only change the Total Plant Capacity and Annual Production to get the get the cost
associated with the specific Total Plant Capacity and Annual Production
Tao Wang
3