Using Functions in Excel 2007 Formulas
In Excel 2007, functions are like builtin formulas that perform simple to complex tasks. For example, the SUM function sums up numbers, the COUNT function counts, and the AVERAGE function calculates an average.
There are functions to handle many different needs: working with numbers, working with text, working with dates and times, working with finance, and so on. Functions can be combined and nested (one goes inside another). Functions return a value, and this value can be combined with the results of another function or formula. The possibilities are endless.
But functions do not exist on their own. They are always a part of a formula. Now that can mean that the formula is made up completely of the function or that the formula combines the function with other functions, data, operators, or references. But functions must follow the formula golden rule: Start with the equal sign. Look at some examples:
Function/Formula  Result 

=SUM(A1:A5)  Returns the sum of the values in the range A1:A5. This is an example of a function serving as the whole formula. 
=SUM(A1:A5) /B5  Returns the sum of the values in the range A1:A5 divided by the value in cell B5. This is an example of mixing a function’s result with other data. 
=SUM(A1:A5)+AVERAGE(B1:B5)  Returns the sum of the range A1:A5 added with the average of the range B1:B5. This is an example of a formula that combines the result of two functions. 
Ready to write a formula with a function in it? Follow these steps to create a function that calculates an average:

Enter some numbers in a column’s cells.

Click an empty cell where you want to see the result.

Enter =AVERAGE( to start the function.
Excel presents a list of functions that begin with the same spelling as the function name you type. The more letters you type, the shorter the list becomes. The advantage is, for example, typing the letter A, using the down arrow to select the AVERAGE function, and then pressing the Tab key.

Click the first cell with an entered value and, while holding the mouse button, drag the mouse pointer over the other cells that have values.
An alternative is to type the range of those cells.

Type a ).

Press Enter.
In the following figure, cell B10 has the calculated result, but look up at the Formula Bar and you can see the actual function as it was entered.
Formulas and functions are dependent on the cells and ranges to which they refer. If you change the data in one of the cells, the result returned by the function changes. You can try this now. In the example you just followed to create an average, select one of the cells with the values and enter a different number.