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- Computer lab instructions
- Spreadsheet usability
- Net Present Value discussed
- Assignment
- Cost Benefit Analysis discussed
Computer Lab Instructions
The videos in computer lab sessions give instructions for using the spreadsheets supplied. You will find the spreadsheets easier to use if you begin with the videos.
The spreadsheets supplied have areas that are highlighted in yellow that you can edit and (in some instances) format. You cannot edit areas that are not highlighted in yellow. You cannot unlock the rest of the spreadsheet and if you find some spiffy way to unlock the spreadsheet, I will not be able to credit you for that spreadsheet.
The videos are intended to be used following a particular process:
1. Watch a video,
2. Do what is instructed,
3. Make sure the self-checking value is “true” for each cell you have worked on (For the very first two videos only, there is no self-checking spreadsheet, almost everything is instruction),
4. If not, watch the video again, repeat the instructed action, and check your results again, then
5. Move on to the next video.
6. Do not watch multiple videos before following instructions.
7. These instructions require you to become more independent as the semester progresses.
Computer lab video numbers are strictly for keeping videos in order and do not correspond to exercise numbers in the textbook.
Spreadsheet Usability
The spreadsheets you are provided work in Excel 2013 and (most likely) Excel 2010 through Excel 2019 as implemented in Windows OS. There are features that may not work in older versions of Excel or Excel as implemented in Apple OS or in any other OS.
If you do not have access to Excel as implemented in Windows OS, you can gain access at Baruch’s computer labs. If you choose to proceed using Excel in Apple OS, you may find that you cannot obtain the full points available. This may affect only some assignments.
If you choose to use something besides Excel, features may fail catastrophically. If you open the spreadsheet in any software and discover that you see an answer (not just a confirmation that your answer is correct) or any hidden part of a spreadsheet, you should close the spreadsheet immediately and use Excel. See the syllabus for more.
The spreadsheet you are using has password protected hidden areas. These are not for your use. If you need a password, I have provided it to you in the instructions. If you think you need a password I have not provided, you are trying to access an area of the spreadsheet that is not for your use. If you use a provided password and it fails, likely:
- You have tried to access a broader range of cells than intended; the solution is to select only the intended cells, which are most likely highlighted in yellow, or
- You are not using Excel 2010 or later as implemented in Windows OS; the solution is to either obtain access to a current version of Excel for Windows or use a computer lab computer.
Please:
- Do not add passwords to any file you submit for grading.
Net Present Value
Slides
The following video uses the lottery to explain present value. The rules to the MegaMillions lottery have changed since this video was made and now more closely resemble the Power Ball lottery. The asserted reason is to provide an inflation-resistant income for the lottery winners. Can you think of a different reason?
The different reason is that the declared winnings (the difference between original investment and final payout) when more of the money is in the distant future.
Beginning here we focus on the spreadsheet assignment.
We learn more than NPV, we also learn Future Value (FV) and Payment amounts (PMT)
The Excel F(x) may require some values be entered as negative numbers
{I have updated this spreadsheet to solve a problem with the name populating other sheets; I am hoping I didn’t break anything}
Budget tools 2e Module 06 Time value self-checking -2021 is used in the next video. It is the assigned homework. BECAUSE THE WEBSITE WHERE THIS IS POSTED WANTS YOU TO TREAT THIS AS A WEB SERVICE, IT OPENS IN AN ONLINE WINDOW, DOWNLOAD IT TO YOUR COMPUTER, DO NOT EDIT IT ONLINE.
Cost Benefit Analysis
The last three videos show you how to use Excel to obtain values related to the time value of money. Modules 17, 18, & 20, provide skills using these concepts. Modules 6 & 17 show that projects are selected based on their net value. If the net value is negative, the analysis recommends against the project. You should take special interest in Module 18, where you learn about life-cycle costing (LCC). The core idea of LCC is to consider all costs associated with a capital project, not just acquisition, financing and disposal.
While these time oriented concepts are primarily associated with capital costs, they can be used with other financial issues, particularly with those related to the long-term consequences of public policies. For example, LCC is sometimes considered the appropriate paradigm for understanding environmental issues, where short-term economic gains may be weighed against a wide variety of long-term costs.
You should also review our previous lesson with sensitivity analysis (Module 8). Present value calculations generally rely on numerous uncertain assumptions, such as the assumed discount rate. Small changes in these assumptions may have substantial consequences concerning the net positive or negative value of a project.
This video further discusses cost benefit analysis and discusses interest rates.
The OMB Circular A-94 Appendix C link that appears in the video has changed, the current link (in 2021) is:
https://www.whitehouse.gov/wp-content/uploads/2020/12/2020_Appendix-C.pdf