Excel 2007_ Using What-If Analysis
Excel 2007_ Using What-If Analysis
Excel 2007
Using What-If Analysis
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Introduction
The real power in Excel lies in its ability to perform multiple mathematical calculations
for you. One of the tools in Excel that you can use to perform these calculations is a
Data tool called what-if analysis. What-if analysis allows you to see the effect different
values have in formulas. Have you ever thought, "What interest rate do I need to qualify
for to have a car payment of $400 on the car I want?" This question can be answered
using what-if analysis.
In this lesson, you will learn how to use a what-if analysis tool called Goal Seek.
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What-if analysis
Watch the video! (5:18 min)
Example
You need a loan to buy a new car. You know how much money you want to borrow, how long of a period of time
you want to take to pay off the loan (the term), and what payment you can afford to make each month. But what
you need to know is what interest rate you need to qualify for to make the payment $400 per month. In the image
below, you can see that if you didn’t have interest and just divided this $20,000 into 60 monthly payments, you
would pay $333.33 per month. The what-if analysis tool will allow you to easily calculate the interest rate.
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Goal seek is useful if you know the needed result but need to find the input value that will give you the desired
result. In this example, we know the desired result (a $400 monthly payment) and are seeking the input value (the
interest rate).
Goal Seek
Click OK.
Then, click OK again. The interest rate appears in the cell. This indicates that a 7% interest rate will give us a
$400 a month payment on a $20,000 loan that is paid off over five years, or 60 months.
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Challenge!
Use the Car Loan workbook to complete this challenge.
Use Goal Seek to solve the problem described in the text and video lessons.
Create a problem of your own that you might use Goal Seek to solve. Try it.
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