Succeeding in business with microsoft excel 2010 a problem solving approach 1st edition gross soluti

Succeeding in Business with Microsoft Excel 2010 A Problem Solving Approach 1st Edition Gross Solutions Manual Visit to download the full and correct content document: https://testbankdeal.com/dow nload/succeeding-in-business-with-microsoft-excel-2010-a-problem-solving-approach -1st-edition-gross-solutions-manual/

Succeeding in Business with Microsoft Excel 2010

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Succeeding in Business with Excel 2010 Chapter 6: Evaluating the Financial Impact of Loans and Investments A Guide to this Instructor’s Manual: We have designed this Instructor’s Manual to supplement and enhance your teaching experience through classroom activities and a cohesive chapter summary.

This document is organized chronologically, using the same heading in black that you see in the textbook. Under each heading you will find (in order): Lecture Notes that summarize the section, Figures and Boxes found in the section (if any), Teacher Tips, Classroom Activities, and Lab Activities. Pay special attention to teaching tips, and activities geared towards quizzing your students, enhancing their critical thinking skills, and encouraging experimentation within the software.

In addition to this Instructor’s Manual, our Instructor’s Resources CD also contains PowerPoint Presentations, Test Banks, and other supplements to aid in your teaching experience.

For your students: Our latest online feature, CourseCasts, is a library of weekly podcasts designed to keep your students up to date with the latest in technology news. Direct your students to http://coursecasts.course.com, where they can download the most recent CourseCast onto their mp3 player. Ken Baldauf, host of CourseCasts, is a faculty member of the Florida State University Computer Science Department where he is responsible for teaching technology classes to thousands of FSU students each year. Ken is an expert in the latest technology and sorts through and aggregates the most pertinent news and information for CourseCasts so your students can spend their time enjoying technology, rather than trying to figure it out. Open or close your lecture with a discussion based on the latest CourseCast.

Table of Contents Learning Objectives EX 366: Understanding How Interest Is Calculated EX 368: Reviewing Alternative Financing Options EX 369: Using the PMT Function to Determine a Loan Payment EX 374: Using the Rate, NPER, PV, and FV Functions EX 381: Selecting a Financing Option EX 384: Designing the Cash Flow Estimate Worksheet EX 388: Setting Up an Amortization Table EX 394: Calculating Depreciation Using the SLN Function EX 399: Calculating Taxes EX 405: Setting Up a Worksheet to Analyze Profitability EX 408: Calculating Net Present Value EX 411: Calculating the Internal Rate of Return

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EX 414: Calculating the Return on Investment EX 415: Determining the Payback Period EX 417: Setting Up the Worksheet for the Low Capital Option EX 419: Evaluating the Results of the Analysis End of Chapter Material Glossary of Key Terms

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Learning Objectives Students will have mastered the material in Chapter One when they can: Level 1 • Understand how compound interest and simple interest are calculated • Determine the value of a loan payment • Analyze positive and negative cash flows • Determine the future value and the present value of a financial transaction • Determine the interest rate and the number of periods of a financial transaction Level 2 • Set up an amortization table to evaluate a loan • Calculate principal and interest payments • Calculate cumulative principal and interest payments • Set up named ranges for a list • Calculate depreciation and taxes Level 3 • Set up a worksheet to analyze profitability • Calculate the net present value • Calculate the internal rate of return • Calculate the return on investment • Determine the payback period

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EX 366: Understanding How Interest Is Calculated LECTURE NOTES • Introduce the terms interest, principal, simple interest, compound interest, annual percentage yield (APY), and annual percentage rate (APR).

CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 1 through 6 of The Conceptual Review.

2. Quick Quiz: 1) The ____ is the value of a loan or investment. (Answer: principal) 2) Adding interest earned each period to the principal for purposes of computing interest for the next period is known as ____. (Answer: compound interest) 3. Critical Thinking: Discuss other factors that can influence the interest to be paid on an investment or charged to borrow funds.

LAB ACTIVITIES 1. Ask students to calculate the payments with interest, compound interest, and compound quarterly interest on a typical credit card debt of $5,000 with an APR of 18%.

EX 368: Reviewing Alternative Financing Options LECTURE NOTES • Present the options being considered for the TZEdge shoe project.

CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 7 through 10 of the Conceptual Review.

2. Class Discussion: What are the advantages and disadvantages of using financing option 1?

LAB ACTIVITIES 1. Ask students to write a formula to determine the yearly interest rate being charged by the bank on a $350,000, 30-year mortgage. You make a monthly mortgage payment of $1800, and the value of the loan at the end of 30 years is 0. Interest is compounded monthly.

EX 369: Using the PMT Function to Determine a Loan Payment LECTURE NOTES • Use Figure 6.1 to illustrate the timeline of the financial transaction for a $1 million loan.

• Introduce the PMT function.

• Introduce the terms cash flow, positive cash flow, and negative cash flow, see Figure 6.2.

• Note that you should pay close attention to the compounding period being used.

• Use Figure 6.3 to illustrate the use of the PMT function.

• Use Figure 6.4 to illustrate the application of cell references within the PMT function.

FIGURES 1. 6.1, 6.2, 6.3, 6.4

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CLASSROOM ACTIVITIES • Class Discussion: Ask students to explain why Ryan must use the PMT function to determine the quarterly payment.

• Quick Quiz 1) The ____ argument of the PMT function is the interest rate per compounding period.

(Answer: rate) 2) The ____ argument of the PMT function is the number of compounding periods.

(Answer: nper) EX 374: Using the Rate, NPER, PV, and FV Functions LECTURE NOTES • Use Table 6.1 to discuss basic financial functions.

• Use Figure 6.5 to illustrate the use of the FV function.

• Use Figure 6.6 to illustrate the use of the PV function.

• Use Figure 6.7 to illustrate the use of the RATE function.

• Use Figure 6.8 to illustrate the use of the NPER function.

FIGURES • 6.5, 6.6, 6.7, 6.8 TABLE • Table 6.1 BOXES 1. How To: Write a Basic Financial Function. Discuss the steps involved in writing a basic financial function.

2. Best Practice: Working with Positive and Negative Cash Flows. Note that when writing formulas with financial functions, you need to be certain that the functions have the appropriate positive and negative cash flows.

3. Best Practice: Accounting for Loan Options. Discuss additional options that should be considered when writing formulas.

TEACHER TIP Note that before constructing a formula with a financial function, it’s a good idea to determine the timeline of the financial transaction.

CLASSROOM ACTIVITIES 1. Class Discussion: Ask students to explain why Ryan uses the following formula in cell G4 of the Options worksheet shown in Figure 6.5: =FV(C4/B4,D4*B4,E4,F4) 2. Quick Quiz 1) True or False: The syntax of the FV function is FV(rate,nper,pmt,pv). (Answer: False) 2) True or False: The syntax of the RATE function is RATE(nper,pmt,pv,fv,type).

(Answer: False)

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LAB ACTIVITIES 1. Consider a $750,000 mortgage at 6% annual interest compounded monthly, to be paid back over the next 30 years. The loan will have a $10,000 balloon payment due at the end of the loan. Write a formula to determine the monthly payment on this loan.

EX 381: Selecting a Financing Option LECTURE NOTES • Use Figure 6.9 to introduce the modified worksheet.

FIGURE • 6.9 BOXES 1. Steps To Success: Level 1: Ask students to complete the assignments.

CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 11 through 16 of the Conceptual Review.

2. Class Discussion: With the limited information available, which option do you think is more favorable?

EX 384: Designing the Cash Flow Estimate Worksheet LECTURE NOTES • Use Figure 6.10 to illustrate the projected cash flow estimate.

• Introduce the term depreciation.

• Use Figures 6.11 and 6.12 to illustrate the process for calculating cash flow.

FIGURES • 6.10, 6.11, 6.12 CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 17 and 18 of the Conceptual Review.

2. Quick Quiz 1) True or False: The principal payment of a loan is not directly tax deductible. (Answer: True) 2) ____ is the process by which a company spreads the expense of an asset over its useful life.

(Answer: Depreciation) EX 388: Setting Up an Amortization Table LECTURE NOTES • Introduce the concept of an amortization table, see Figure 6.13.

• Introduce the PPMT and IPMT functions.

• Use Figure 6.14 to illustrate the calculation of the interest portion of each payment.

• Use Figure 6.15 to illustrate the completed amortization table.

• Introduce the CUMIPMT and CUMPRINC functions.

• Use Figure 6.16 to illustrate the projected 5-year cash flow estimate.

• Use Figures 6.17 and 6.18 to illustrate the formula used to determine the cumulative interest payment for year 1.

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FIGURES • 6.13, 6.14, 6.15, 6.16, 6.17, 6.18 CLASSROOM ACTIVITIES 1. Class Discussion: Ask students to explain why Ryan uses the following formula in cell C11 in the worksheet shown in Figure 6.14: =IPMT(B$3/B$5,A11,B$4*B$5,B$2,B$6,0).

2. Quick Quiz 1) A standard method of detailing a loan transaction is to set up what is known as a(n) ____.

(Answer: amortization table or schedule) 2) True or False: The PPMT function calculates the value of the interest payment for a specified period. (Answer: False) EX 394: Calculating Depreciation Using the SLN Function LECTURE NOTES • Introduce the concept of straight line depreciation, see Figure 6.19.

• Use Figure 6.20 to illustrate the Create Names from Selection dialog box.

• Use Figure 6.21 to illustrate the calculation of straight line depreciation and taxable income.

• Introduce the following functions: Double-Declining Balance, Sum of the Years Digits, FixedDeclining Balance, and Variable-Declining Balance.

FIGURE • 6.19, 6.20, 6.21 BOXES 1. How To: Create a List of Named Ranges That Correspond to Descriptions. Discuss the steps involved in creating a list of named ranges that correspond to descriptions.

2. Best Practice: Using Named Ranges Globally and Locally. Discuss the techniques used to name a range in Excel 2010.

CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 19 and 20 of the Conceptual Review.

2. Quick Quiz 1) ____ basically allocates the value of an asset evenly throughout the life of the asset. (Answer: Straight line depreciation) 2) The ____ method computes depreciation at an accelerated rate. (Answer: double-declining balance) 3) The ____ method returns the depreciation of an asset for any period you specify, including partial periods, using the double-declining balance method or some other method you specify.

(Answer: variable-declining balance) EX 399: Calculating Taxes LECTURE NOTES • Use Figure 6.22 to illustrate the New Name dialog box.

• Use Figure 6.23 to illustrate the calculation of taxes and income after taxes.

• Use Figure 6.24 to illustrate the final worksheet for the projected cash flow estimate.

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Use Figure 6.25 to illustrate the calculation of a loan payment where payments begin after one year of accruing interest.

Use Figure 6.26 to illustrate the structure for the projected cash flow estimate of the Ski Molder project.

FIGURES • 6.22, 6.23, 6.24, 6.25, 6.26 BOXES 1. How To: Define a Range Name for a Value Not Listed in the Worksheet. Discuss the steps involved in defining a range name for a value not listed in the worksheet.

2. Best Practice: Nesting Basic Financial Functions to Calculate Variable Periodic Payments. Discuss the more complex financial functions that allow for variable payments, interest rates, and so on.

3. Steps To Success: Level 2: Ask students to complete the assignments.

CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete questions 21 and 22 of the Conceptual Review.

2. Class Discussion: Ask students to interpret the results of the worksheet in Figure 6.24.

EX 405: Setting Up a Worksheet to Analyze Profitability LECTURE NOTES • Discuss the modifications made by Ryan to include all of the relevant data inputs for loan values and depreciation, see Figures 6.27 and 6.28.

FIGURES • 6.27, 6.28 CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete the case problem for Llevel 1.

2. Class Discussion: What is the difference between net present value and internal rate of return?

EX 408: Calculating Net Present Value LECTURE NOTES • Provide definitions for the terms net present value (NPV) and rate of return (hurdle rate or discount rate) • Discuss the steps involved in setting up a table of hurdle rates, see Figure 6.29.

• Use Figure 6.30 to illustrate the results for NPV at different hurdle rates.

FIGURES • 6.29, 6.30 BOXES 1. Best Practice: Avoiding Problems of Year 0 Cash Flows When Using the NPV Function. Instruct students on how to avoid problems of year 0 cash flows when using the NPV function.

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CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete the case problem for level 2.

2. Quick Quiz 1. ____ uses expected cash flows and applies a minimum rate of return to discount these cash flows into current (present) value dollars, essentially finding the present value for each year’s income.

(Answer: Net present value (NPV)) 2. The ____ is an interest rate chosen to reflect not only the time value of money, but the desired returns the company expects for the level of risk being taken. (Answer: rate of return, hurdle rate, or discount rate) EX 411: Calculating the Internal Rate of Return LECTURE NOTES • Introduce the internal rate of return (IRR) method of evaluating profitability, see Figure 6.31.

• Use Figure 6.32 to illustrate the XY Scatter plot of NPV versus hurdle rates.

FIGURES • 6.31, 6.32 CLASSROOM ACTIVITIES 1. Class Discussion: Ask students should be able to explain why Ryan uses the following formula in cell B39 shown in Figure 6.31: =IRR(B27:G27).

2. Quick Quiz 1) True or False: The syntax of the IRR function is as follows: IRR(values,guess). (Answer: True) 2) True or False: Usually, projects with lower IRRs are preferable to projects with higher IRRs. (Answer: False) EX 414: Calculating the Return on Investment LECTURE NOTES • Provide a definition for the term return on investment (ROI), see Figure 6.33.

FIGURE • 6.33 CLASSROOM ACTIVITIES 1. Class Discussion: Ask students to explain why Ryan used the following formula in cell B41 of the worksheet shown in Figure 6.33: =SUM(C27:G27)/C5.

2. Quick Quiz 1) ____ is the sum of the cash flows, excluding the initial investment, divided by the investment value. (Answer: Return on investment (ROI)) 2) True or False: ROI does not take into account the time value of money. (Answer: True) EX 415: Determining the Payback Period LECTURE NOTES • Introduce the term payback period, see Figure 6.34.

• Use Figure 6.35 to illustrate the automation of the payback calculation.

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FIGURES • 6.34, 6.35 BOXES 1. How To: Automate the Payback Calculation. Discuss the steps involved in automating the payback calculation.

CLASSROOM ACTIVITIES 1. Class Discussion: Ask students to explain what a payback of three years means.

2. Quick Quiz 1) True or False: Over the long term, calculating the payback period does not always give the most realistic view of the most profitable venture. (Answer: True) 2) True or False: The payback year is the year in which the cumulative total cash flow is greater than or equal to $0. (Answer: True) EX 417: Setting Up the Worksheet for the Low Capital Option LECTURE NOTES • Use Figure 6.36 to illustrate the steps involved in calculating the profitability of the low caption option.

FIGURE • 6.36 BOXES 1. Best Practice: Using an ISNUMBER Function to Avoid Displaying an Error Message. Discuss the use of the ISNUMBER function.

CLASSROOM ACTIVITIES 1. Class Discussion: Ask students to interpret the results of the worksheet (Figure 6.36).

2. Quick Quiz 1) True or False: Chart ranges include both sheet names and absolute cell references.

(Answer: True) 2) The ____ function tests to see if the result of the formula is a number. (Answer: ISNUMBER) 3. Critical Thinking: For what types of analyses would you use the financial functions presented in this chapter?

EX 419: Evaluating the Results of the Analysis LECTURE NOTES • Use Table 6.2 to compare investment values.

• Use Table 6.3 to view projected income after taxes for the two options for the tennis shops.

TABLES • 6.2, 6.3 BOXES 1. Steps To Success: Level 3: Ask students to complete the assignments.

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CLASSROOM ACTIVITIES 1. Assign a Project: Ask students to complete the case problem for level 3.

2. Class Discussion: Ask students to interpret the results shown in Table 6.2.

3. Critical Thinking: After completing his work, Ryan cannot make a clear cut decision about which financing option to pursue. Discuss what you might do in such a situation.

End of Chapter Material • • •

Chapter Summary The Conceptual Review is a series of questions designed to reinforce concepts learned in the chapter.

Case Problems contain three scenarios that allow students to explore the topics in the chapter. Each of the three case studies contains an assignment for students.

Succeeding in Business with Microsoft Excel 2010

Glossary of Key Terms • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Amortization table (EX 388) Annual percentage rate (APR) (EX 368) Annual percentage yield (APY) (EX 368) Balloon payment (EX 381) Cash flow (EX 371) Compound interest (EX 367) CUMIPMT function (EX 392) CUMPRINC function (EX 392) Depreciation (EX 386) Discount rate (EX 408) Double-declining balance (EX 398) Down payment (EX 381) Fixed-declining balance (EX 399) FV function (EX 375) Hurdle rate (EX 408) Interest (EX 366) Internal rate of return (IRR) (EX 411) IPMT Function (EX 389) IRR Function (EX 411) ISNUMBER Function (EX 418) Negative cash flow (EX 371) Net present value (NPV) (EX 407) NPER function (EX 380) NPV Function (EX 407) Payback period (EX 415) PMT function (EX 370) Positive cash flow (EX 371) PPMT Function (EX 389) Principal (EX 366) PV function (EX 377) RATE function (EX 379) Rate of return (EX 408) Return on investment (ROI) (EX 414) Simple interest (EX 366) SLN Function (EX 394) Straight line depreciation (EX 394) Sum of the years digits (EX 399) Variable-declining balance (EX 399)

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