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Strategy: Upgrade to 64-bit Excel. Excel 2010-2016 can only use 2GB of the memory on your machine.
Adding memory beyond the 2GB that is already likely in your computer won’t help. When you convert to
64-bit Excel, Excel can use up to 8 Terabytes of memory.
Even if you have 64-bit Windows, the default is still for Excel to install as 32-bit. Here is how to check. Go to File, Account. Click About Microsoft Excel. Check the very top line of that dialog box. If your version number does not end in 64-bit, you are limited to 2 GB of memory usage.
Figure 303 98% of all Excel installations are not taking advantage of 64-bit.
Problem: Our company uses an ancient add-in that still is not compatible with 64-bit, so we are stuck with 32-bit.
Strategy: Read Charles Williams white paper on Formula Speed. This document has amazing ideas on how to be mindful of formula speed when building Excel formulas. The document is at http://mrx.cl/excelspeed. Charles also sells the Fast Excel V3 utility which will analyze your workbook for bottlenecks. For details: http://mrx.cl/2cxAaCt.
One concept in the article is moving a slow-calculating part of a formula out to a helper cell. If you have
1000 formulas that all divide by the same COUNTIF, you could move the COUNTIF to another cell and then have the 1000 formulas point to that one cell.
Another example is creating running totals. There are two choices here; use a formula of “add the cell above me to the cell to the left of me”, also represented in R1C1 by =R[-1]C+RC[-1]. The other formula is the ultra-cool =SUM(E$2:E2). This formula’s single dollar sign ensure that the range expands. Both pro- vide the same answer.
Figure 304 Both formulas provide the same answer.
Personally, I would always use the formula shown in Column D, because it is clever. In Charles’ article, he points out that Excel only has to look at two cells to calculate cell C15191. It has to look at 15,190 cells to calculate cell D15191. With over 15,000 cells in the data set, this difference is dramatic. To calculate all of column C requires Excel to look at 30 thousand cells. To calculate all of column D requires Excel to look at 115 million cells. Column C will calculate in a miniscule fraction of the time of column D. If your worksheet is getting slower, check out Charles William’s excellent article.
EXACT FORMULA COPY
Problem: I need to make an exact copy of a range of formulas. I do NOT want the cell references to change as I copy. Whoever set up the worksheet did not include dollar signs in the formulas. It is like I want to do a cut and paste, but keep the original formulas there.
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This is a common problem. If you copy and paste, the formula references will change. If you cut and paste, the formula references keep pointing at the same place. But, with a cut and paste, the original formulas are no longer there.
Strategy: Use Find and Replace to replace the leading equals sign with a word. This changes the formulas to text. Copy the text to the new location, then use Find and Replace to change the word back to an equals sign. You will now have two identical sets of formulae.
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After doing that replace, you have text versions of the formulas. Copy the text to a new place.
Figure 305 Replace = with any word.
Use Find and Replace on both the original and copied range to change the word back to an equals sign
You have an exact copy of the original formulas..
Figure 306 Change the text back to formulas.
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CALCULATE A LOAN PAYMENT |
Problem: I am considering buying a car. I want to calculate the loan payment.
Figure 307 Set up the price, term, and interest rate..
Strategy: To calculate your car loan payment, you can use the PMT function. Follow these steps:
1. Enter price, term in months, and annual percentage rate in cells A1:B3. The PMT function has three required arguments: the interest rate, the number of payments in the loan, and the original loan amount.
Gotcha: The interest rate must be entered as a percentage. If you are planning on monthly payments
(which is normal), you have to divide the annual percentage rate by 12.
Gotcha: In financial terms, the bank is loaning you $25,995—a positive amount coming to you. Thus, the payments that you make to the bank are really a negative amount—money leaving your wallet. For this reason, the result of the PMT function will be negative. However, you can precede the third argument of the PMT function with a minus sign in order to return a positive payment amount.
2. Enter the formula =PMT(B3/12,B2,-B1) in cell B5.
Figure 308 The PMT function calculates the monthly payment.
CALCULATE MANY SCENARIOS FOR LOAN PAYMENTS
Problem: I am considering buying a car. I used “Calculate a Loan Payment” to calculate a loan payment.
Now I want to do some what-if scenarios in order to see various options of increasing or decreasing the term or price. How can Excel help me with this?
Strategy: You follow the same setup described in “Calculate a Loan Payment.” Then you copy cells B1:B5 and plug in different numbers for the price and/or term.
Figure 309 Copy so that you can play what-if analyses.
This is an area where Excel shines. After you have entered the formulas for one loan model, you can easily copy and create many more loan models.
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BACK INTO AN ANSWER USING GOAL SEEK |
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Problem: I’ve determined that I want to obtain a 60-month loan for a car. The interest rate is 5.25%. I want to find out what loan amount would result in a $425 monthly payment. Currently, the payment for a $25,995 car is too high at $493 as shown previously in Figure 308.
Strategy: Although you could use the PV function to calculate the price of the car, it is easier to use the
Goal Seek command:
1. Select Data, What-if Analysis, Goal Seek. This will bring up the Goal Seek dialog.
2. Indicate that you want to set cell B5 to $425 by changing cell B1.
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Figure 310 Back into an answer.
In a simple case like this one, Goal Seek will almost always succeed. Excel considers different input values until it finds your solution. Within a second, it will report back that it found the correct input cell value.
Figure 311 Excel finds the price to yield the desired payment.
3. To accept the solution, click OK. To revert to the original value, click Cancel.
Results: Thanks to Goal Seek, you find that you can afford to borrow $22,384.93.
Additional Details: The formulas are still live after you use Goal Seek. You can continue to change terms, rates, and prices to calculate new payments.
Gotcha: When there is not a linear relationship between the two cells, Goal Seek may fail to find a solu- tion.
CREATE AN AMORTIZATION TABLE
Problem: I know it is easy to figure out a monthly payment using PMT. I would like to see my loan bal- ance after each month’s payment. How can I build an amortization table?
Strategy: You can use PPMT and IPMT to build this amortization table. Here’s how:
1. In a blank section of the worksheet, add the column headings Payment, Date, Principal, Interest, and Balance.
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2.Ensure that the formula for Balance in the first row points to the price in B1.
3.In the next row of the table, enter the number 1 for Payment. Ctrl+drag the fill handle to fill in the proper number of payments.
4.Enter the first payment date for the Date. Right-click+drag the fill handle to the last row. When you release the mouse button, choose Fill Months.
5.Enter the PPMT function, using the proper absolute references, so that you can copy the function to column D to be used for IPMT. The syntax is =PPMT(rate, per, nper, pv, [fv], [type]). The only differ- ence from the PMT function is the addition of the period number as the second argument. In C8, type
=PPMT(. The rate is B3/12, but after clicking on B3, press the F4 key to add the dollar signs. Type /12 and a comma. Click on the first payment number. Press the F4 key three times so that a dollar sign appears before the column number. Type a comma. Click on the Term in B2 and press F4. Type a comma. Type a minus sign and click on the price in B1. Press F4 and type the closing parenthesis.
The whole formula is =PPMT($B$3/12,$A8,$B$2,-$B$1).
Figure 312 Calculate the principal payment.
6. Copy this formula to the Interest Payment column. Edit the formula and change PPMT to IPMT.
Use the F2 key or double click the cell in order to edit the formula. Alternatively, select the cell. Use the mouse to select the first P in PPMT in the formula bar. Type an I to change to IPMT.
7. For the Balance formula, use the previous balance minus this month’s principal payment.
8. Select the three cells that contain the principal, interest, and balance calculations. Double-click the fill handle to copy the formulas for all months.
Figure 313 The ending balance should be within a penny of zero.
Additional Details: To test that the table is correct, scroll to the last row. You should see that the balance reaches zero with the last payment.
Alternate Strategy: Anytime that you have to enter the numbers 1 to nn for a formula, there is a cool alternative. Instead of putting the formulas in the worksheet, use ROW(A1) where the 1 needs to go. When you copy the formula down, it will change to ROW(A2) which will return a 2, and so on.