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In this tutorial, Ella Lima demonstrates how to insert a letterhead in MS Word by going to the insert tab, selecting the picture, and browsing for the letterhead from the hard drive. Adjust the size of the letterhead by right-clicking on it, selecting size and position, setting height and width to 100%, and choosing the option behind text for text wrapping. Finally, align the letterhead horizontally and vertically to make it centered and relative to the page.