Tips & Tricks for Excel-Based Financial Modeling, Volume I by M.A. Mian

Author:M.A. Mian [M.A. Mian]
Language: eng
Format: epub
Publisher: Business Expert Press
Published: 2017-07-30T16:00:00+00:00

Figure 3.13 Calculating depreciation using 200% declining balance

The SUMPRODUCT Function

This is a very useful function, it can be used to calculate the weighted average of two variables. The SUMPRODUCT function is:

=SUMPRODUCT(array1, [array2], [array3], . . . .[array_n])

The function is very handy in calculating weighted average in many situations.

1. Calculate the average price per item given the price and items sold in Figure 3.14.

a. =SUMPRODUCT(A2:A5,B2,B5)/SUM(B2:B5) = $3.66

Figure 3.14 Using the SUMPRODUCT function to calculate average price per product

2. Calculate the expected reserves (probabilistic weighted average) given the probability and reserves in Figure 3.15.

a. =SUMPRODUCT(A2:A5,B2:B5) = 149.50 barrels

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