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Lesson 03 - 2018

The document provides an overview of sensitivity analysis techniques in Excel, including Data Tables, Goal Seek, and Solver. It explains how to create one-dimensional and two-dimensional data tables to analyze the impact of variable changes on outcomes, along with step-by-step instructions and examples. Additionally, it highlights the differences between Goal Seek and Solver, emphasizing Solver's advanced capabilities for more complex analyses.

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chanaka ashan
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7 views14 pages

Lesson 03 - 2018

The document provides an overview of sensitivity analysis techniques in Excel, including Data Tables, Goal Seek, and Solver. It explains how to create one-dimensional and two-dimensional data tables to analyze the impact of variable changes on outcomes, along with step-by-step instructions and examples. Additionally, it highlights the differences between Goal Seek and Solver, emphasizing Solver's advanced capabilities for more complex analyses.

Uploaded by

chanaka ashan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Sensitivity Analysis

• Data Tables
- One Dimensional
- Two Dimensional
• Goal Seek
• Solver
Data Tables
•Excel “Data Tables” are powerful commands that
facilitates complex sensitivity analyses.

•It helps understanding how the final result is affected


by the changes in the variables used.

•Types of Data Tables


- Impact of one variable  One Dimensional
- Impact of two variables Two Dimensional
One Dimensional Data Table
One Dimensional Data Table
Steps to Follow;
6. Select the range of the table
7. Data  What-If Analysis Data Tables
8. In the “Data Table dialog box”, refer to the variable
in the original example
Column Input  If the variable is arranged in a
Column
Row Input  If the variable is arranged in a
Row
One Dimensional Data Table
Steps to Follow;

9. Hiding the Cell header –


Format cell Custom Type a semicolon(;)
One Dimensional Data Table
Example 01

If we deposit Rs. 1,000 today in a bank account drawing


15% interest and leave it over ten years,

a)what will be its future value?

b) construct a data table to reflect the sensitivity of the


accumulated value (FV) to the interest rate. (Assume
that the interest rate would vary between 5% to 35%)
One Dimensional Data Table
• Data Tables are dynamic
When you change the variables in the original example,
the table would get automatically adjusted.

Example 02
Recalculate Example 01, this time assuming that the
deposits of Rs. 1,000 are made at the end of each of
the next 10 years.
Two Dimensional Data Table
• This allows to consider the sensitivity of two
variables at the same time.

Example 03
Construct a data table to the initial Example 01, to
assess the sensitivity of both interest rate and the
initial deposit. (Assume that the initial deposit would
vary between Rs. 500 to Rs. 3,500)
Two Dimensional Data Table
Example 04
An investment requires an initial investment of Rs. 1,150,000.
The initial cash inflow (at the end of year one) is Rs.234,000.
The CF growth rate is 10% and the required rate of return is
15%. Cash flows are expected to be received over 7 years.
a) Calculate the NPV and IRR.
b) Build data table that shows relationship between growth
rate and NPV/IRR
(GR Range - 5% to 15% with increments of 2%)
c) Build a two dimensional data table that show the
relationship between growth rate, Discount rate and NPV.
(DR Range – 10% to 20% with increments of 2%)
Two Dimensional Data Table

Example 05

Use excel Data Tables to develop;


- PVAF Table
- FVAF Table
(DR Range – 1% to 10%)
(Period Range – 1 to 20)
Goal Seek
• This is a tool which can be used to produce targeted
results from the excel model (Calibrate the model).

Example 06
Solve this algebra example using Goal Seek, when x is 3.

a) Show y if x changes from ‐9 to 11. [Depict through


graph]
c) Find x when Corresponding y is 21.
d) Do the same when y is ‐58
Solver
• This is a similar tool as Goal Seek which is also used for
sensitivity analysis.

• However, Solver is more advanced than Gola Seek.

• Solver has the option to generate answer reports separately to


different scenarios without altering the original answer.

Installing Solver

File Options Add-Ins Solver Add-In Go


Select Solver Add-in OK
• Repeat Example 06 using Solver
Solver
Example 07
You are given the following schedule to calculate final marks of
Suneth.
Marks (Out of 100) % Allocated
Assignments 75 10%
Mid Exam 0 20%
Final Exam 0 70%

If Suneth know that he is capable of getting a maximum of 90


marks for the final examination, find the marks necessary to get a
final grade of 90 Marks.
Thank You

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