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In this tutorial, Ella Lima demonstrates how to add a letterhead in MS Word. Start by navigating to the Insert tab and clicking on the Picture option to browse for your letterhead file on your hard drive. After inserting the image, you'll notice it doesn't touch the document borders and may appear smaller. To adjust this, right-click on the picture and select Size and Position. Set both height and width to 100%. Next, go to the Text Wrapping tab and choose the option that positions it behind text. Finally, under the Position tab, align the letterhead horizontally to the center of the page and adjust the vertical alignment as needed.