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MICROSOFTOffice Excel.

Intermediate Skills

Exploring Excel Functions


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Microsoft Office Excel 2007 - Intermediate Skills

LearnIT INSTRUCTION - 2008 |

Excel Functions - Goal Seek

You use Goal Seek to find the result you want by adjusting an input value. For example, suppose that you need to
borrow some money. You know how much money you want, how long you want to take to pay off the loan, and how
much you can afford to pay each month. You can use Goal Seek to determine what interest rate you will need to
secure in order to meet your loan goal.
In our exercise we are going to use Goal Seek to help us solve a problem of What is the maximum amount of
mortgage I can afford if I know the term, interest and maximum monthly payment I can pay?
Lets determine this by following this procedure.
1. Open a new workbook and enter the following information

A1 = Principal
A2 = Interest Rate
A3 = Term
A4 = Payment

2. Now enter the following information

B1 = -500,000 (amount of mortgage)

B2 = 7% (annual interest rate)
B3 = 360 (number of payments (months) to pay off the mortgage)

3. In cell B4 enter the PMT function (see PMT Function Module for details) to determine the monthly
payments. The following information should be entered into the fields:

Rate = B2/12
Nper = B3
Pv = -B1

4. Based on this function your answer should be $3,326.51

We have determined that this payment is too high; therefore, we will use the Goal Seek feature to help us solve the

1. On the Data tab, in the Data Tools group, click What-If Analysis > Goal Seek
2. In the Set cell box, enter the reference for the cell that contains the formula. In the example, this
reference is cell B4
3. In the To value box, type the formula result that you want. Lets enter 1,500 (this is the maximum
amount we would like to or can afford to spend on a monthly basis
4. In the By changing cell box, enter the reference for the cell that contains the value that you want to
adjust. In the example, this reference is cell B1 the Principal cost of the mortgage.
Note The cell that Goal Seek changes must be referenced by the formula in the cell that you specified
in the Set cell box.


Microsoft Office Excel 2007

LearnIT INSTRUCTION - 2008 |

1. Click OK.
2. Goal Seek runs and produces a result, as shown in the following illustration
3. If you agree with the result now appearing in cell B1 click OK to return to your workbook

In our example, if we can only afford a payment of $1500 a month for a term of 360 months at the current interest
rate of 7%, we could only afford to purchase a house costing $225,461.