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In this video tutorial, Ben from Action Step explains how calculated merge fields work in the system. These fields enable users to create new merge fields using PHP coding language. The codes can be simple or complex based on PHP knowledge, but even simple ones can be useful. To create a new calculated merge field, go to admin document templates and click on the list of merge fields. You can edit existing fields by searching for them or create a new one by clicking a button and providing a name and description. The calculation code for PHP can be entered, and a record can be tested similar to the document merge tool.