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In this tutorial, Ella Lima demonstrates how to insert a letterhead in MS Word. Begin by navigating to the insert tab, selecting the picture option, and choosing the letterhead image from your hard drive. Adjust the size of the image to ensure it fits the document borders by right-clicking, selecting size and position, setting the height and width to 100%, and choosing the text wrapping option behind text. Finally, align the image horizontally and vertically to center it on the page.