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Microsoft Correcting Calculation Error in Excel 2007

Yuriy

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Microsoft Correcting Calculation Error in Excel 2007


By Vivek Shankar

Sept. 28 (Bloomberg) -- Microsoft Corp., the world's biggest software maker, is working to correct multiplication errors in Excel 2007, the latest version of the most popular spreadsheet program.

Excel gives the wrong answer for some calculations with answers between 65,534 and 65,536, Microsoft employee David Gainer said in a blog posting dated Sept. 25. The problem lies in the function that shows answers on the screen, not in the actual calculation, he said.

Microsoft has found a solution and is checking to see if the correction causes other problems, Gainer said. Excel 2007 is part of the Office suite of programs, Microsoft's biggest business last year. The error only affects the 2007 edition, which went on sale broadly in January.

``We take calculation in Excel very seriously,'' Gainer wrote. ``We do everything we can in order to ensure that calculation is correct for all cases.''

Another product, Excel Services 2007, is also affected by the bug, Gainer wrote. Waggener Edstrom Worldwide, the public relations firm for Redmond, Washington-based Microsoft, didn't have an immediate comment.

Microsoft's business unit, which includes Office, generated about a third of Microsoft's $51.1 billion in sales last year, according to a regulatory filing. Office 2007 was the biggest design overhaul of the product in more than a decade.

Microsoft fell 3 cents to $29.46 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has fallen 1.3 percent this year.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601204&sid=aetckDSW4Kew&refer=technology
 
Not really a bug, but using Excel IRR function to calculate return on a fixed income security generating a large amount of cash, can significantly overstate its yield.

That fact was quickly pointed out to me by a structuring quant during an interview last year...

[me] proudly showing off my model with all the bells and whistles...
[quant] "So how do you calculate the yield in your ABS model"
[me] "I use Excel IRR to quickly a rate which is used as proxy for yield..."
[quant] "mmmm...that will overstate your true bond yield"
[me] "why is that?"
[quant] "very simple, Excel IRR function assumes that the intermediate cash is reinvested at the same rate"
[me] ...

How to Fix Excel's IRR -- An article about Excel.
 
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