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Excel includes a tool that makes it very easy to play "what if" by making changes in a variable. While you could make the changes manually, it is much easier to allow Excel to adjust the variable for you to reach a desired result.
For instance, let's suppose that you want to calculate how much money you will need to deposit in a savings account for each of 24 months in order to have $2,500 there at the end of the two years. You know the interest rate, but you are not sure of the amount. You put together a very, very simple future value calculator. In cell B4 is your deposit amount (unknown right now), cell B5 contains your interest rate 3.25% (nobody said this was a stellar investment vehicle), and cell B6 is the number of months (24). In cell B7 you enter the actual formula for the future value calculation, as follows:
If you wanted to determine how much you needed to deposit in the account each month, you could repeatedly change the deposit value (cell B4) until you got close to the desired goal. This is where the goal seeking tool comes in, however. Follow these steps:
ExcelTips is your source for cost-effective Microsoft Excel training. This tip (2008) applies to Microsoft Excel 97, 2000, 2002, and 2003.
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