First of all, the Cura first run wizard could guide you a bit better. With some photos, and better guidance. Sorry about that.
It assumes you do a cold extrusion, but I haven't found a difference between cold and hot extrusion. But some people say there is. (putting 100mm of filament trough the hotend would create quite a mess, and wouldn't work at the speed it is using for the calibration)
On how to do it, I did it like this:
http://daid.eu/~daid/IMG_20120302 ... small.jpeg
http://daid.eu/~daid/IMG_20120302 ... small.jpeg
If you enter the extruded length into Cura, then it will update the "steps per E" for you. No need to use formulas. (which would be silly, why let the user calculate something if you have a big calculating machine in front of you)