Grader - Instructions Excel 2019 Project

Hands-On Exercise-Chap 02-Part 3-Loans (2019)

Project Description:
Erica wants you to complete another model that she might use for future mortgage data analysis. As you study the model, you
realize you need to incorporate logical, lookup, and financial functions. Skills covered: Use the VLOOKUP Function • Use the
PMT Function • Use the IF Function There is additional information including specific images, refined instructions, and Mac
troubleshooting tips provided with each step of the instructions in the textbook. Refer to Hands-On Exercises starting on page
177 of the textbook or navigate in the e-textbook to 2: Formulas And Functions: Performing Quantitative Analysis > Hands-On
Exercises: Logical, Lookup, and Financial Functions.

Steps to Perform:

Points
Step Instructions
Possible

1 Open e02h3Loans. 0

2 Step 1: Use the VLOOKUP Function - Rates vary based on the 0

number of years to pay off the loan. Erica created a lookup table for
three common mortgage terms and she entered the current APR for
each item. The lookup table will provide efficiency later when the rates
change. You will use the VLOOKUP function to display the correct rate
for each customer based on the number of years of their respective
loans.
3 Click the Payment Info worksheet tab to display the worksheet 6
containing the data to complete. Click cell G9, the cell that will store
the APR for the first customer. Click the Formulas tab, click Lookup &
Reference in the Function Library group, and then select VLOOKUP.
The Function Arguments dialog box opens.

Ensure that the insertion point is in the Lookup_value box, click the
Collapse Dialog Box, click cell F9 to enter F9 in the Lookup_value
box, and then click the Expand Dialog Box to return to Function
Arguments dialog box. Cell F9 contains the value you need to look up
from the table: 25 years.

Press Tab, click Collapse Dialog Box to the right of the Table_array
box, select the range D4:E6, and then click Expand Dialog Box to
return to the Function Arguments dialog box. This is the range that
contains that data for the lookup table. The Years values in the table
are arranged from lowest to highest. Do not select the column labels
for the range.

Anticipate what will happen if you copy the formula down the column.
What do you need to do to ensure that the cell references always point
to the exact location of the table? If your answer is to make the table
array cell references absolute, then you answered correctly. Press F4
to make the range references absolute. The Table_array box now

Created On: 12/28/2019 1 Hands-On Exercise-Chap 02-Part 3-Loans (2019)

Grader - Instructions Excel 2019 Project

Points
Step Instructions
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contains $D$4:$E$6.

Press Tab and type 2 in the Col_index_num box. The second column
of the lookup table contains the Rates that you want to return and
display in the cells containing the formulas.

Press Tab and type False in the Range_lookup box. To ensure an

exact match to look up in the table, you enter False in the optional
argument.

Click OK.

The VLOOKUP function uses the first loan’s term in years (25) to find
an exact match in the first column of the lookup table, and then returns
the corresponding rate from the second column, which is 3.625%.
4 Copy the formula down the column. 4

Save the workbook.

5 Step 2: Use the PMT Function - The worksheet now has all the 0
necessary data for you to calculate the monthly payment for each loan:
the APR, the number of years for the loan, the number of payment
periods in one year, and the initial loan amount. You will use the PMT
function to calculate the monthly payment.
6 Click cell H9, the cell that will store the payment for the first customer. 6

Click Financial in the Function Library group, scroll through the list,
and then select PMT. The Function Arguments dialog box opens.

Type G9/B5 in the Rate box.

Press F4 to make the reference to cell B5 absolute.

Press Tab and type F9*$B$5 in the Nper box.

Press Tab and type -D9 in the Pv box.

Click OK.
7 Copy the formula down the column. 4

Save the workbook.

Created On: 12/28/2019 2 Hands-On Exercise-Chap 02-Part 3-Loans (2019)

Grader - Instructions Excel 2019 Project

Points
Step Instructions
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8 Step 3: Use the IF Function - Lenders often want borrowers to have a 0

20% down payment. If borrowers do not put in 20% of the cost of the
house as a down payment, they pay a private mortgage insurance
(PMI) fee. PMI serves to protect lenders from absorbing loss if the
borrower defaults on the loan, and it enables borrowers with less cash
to secure a loan. The PMI fee is about 0.38% of the amount financed.
Some borrowers pay PMI for a few months or years until the
outstanding balance owed is less than 80% of the appraised value of
the property. The worksheet contains the necessary values in the input
area. You use the IF function to determine which borrowers must pay
PMI and how much they will pay.
9 Click cell I9, the cell that will store the PMI, if any, for the first 6
customer.

Click Logical in the Function Library group and select IF. The Function
Arguments dialog box opens. You will enter the three arguments.

Type E9>=$B$7 in the Logical_test box. The logical test compares the
down payment percentage to see if the customer’s down payment is at
least 20%, the threshold stored in B7, of the amount financed. The
customer’s percentage cell reference, E9, is relative so that it will
change when you copy it down the column; however, cell B7 must be
absolute because it contains a value that should remain constant when
the formula is copied to other cells.

Press Tab and type 0 in the Value_if_true box. If the customer makes
a down payment that is at least 20% of the purchase price, the
customer does not pay PMI, so a value of 0 will display whenever the
logical test is true. The first customer paid 20% of the purchase price,
so he or she does not have to pay PMI.

Press Tab and type D9*$B$6/$B$5 in the Value_if_false box. If the

logical test is false, the customer must pay PMI, which is calculated by
multiplying the amount financed (D9) by the periodic PMI rate (the
result of dividing the yearly PMI (B6) by the number of payments per
year (B5)).

Click OK.
10 Copy the formula down the column. 4

11 Set the worksheets to print on one page. 4

Created On: 12/28/2019 3 Hands-On Exercise-Chap 02-Part 3-Loans (2019)

Grader - Instructions Excel 2019 Project

Points
Step Instructions
Possible

Add a footer with your name on the left, sheet code in the middle, and
the file name code on the right.
12 Save the workbook. Close Excel. Upload the file to MyITLab for 0
grading according to Pearson's instructions.
Total Points 34

Created On: 12/28/2019 4 Hands-On Exercise-Chap 02-Part 3-Loans (2019)