About Percentages

Many financial calculations involve percentages for values such as interest rates and fees. A percentage is one-one hundredth, so when you write 2%, you really mean 0.02. In all of the templates, I have used Excel’s percentage format for those cells that contain percentage values. This format handles percentages beautifully, not only displaying them with a percent sign but taking care of the conversion.

For example, if you enter the value 2 in a percentage cell, Excel assumes you mean 2%, displays the number as a percent (such as 2.00%), and uses the correct value, .02, in calculations.

However, you need to use care with values less than 1%. If you start an entry with a decimal point, Excel assumes you are entering the actual value and not a percentage. For example, if you enter .1, Excel assumes you mean 10% and not 0.1%. This problem rarely crops up because percentage values less than 1% are hardly ever used in these templates. If it does, simply enter a percent sign after the number. Thus, an entry of .1% is correctly interpreted to mean 0.1% and not 10%.

Understanding some Excel fundamentals is important for getting the most out of the workbook templates included with this book. In the next chapter I’ll explain some more specialized details about how Excel works with money.

Taken From : Manage Your Money and Investments with Microsoft Excel

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