Microsoft Office

Part V
Analyzing Data with Excel
Single-Cell Goal Seeking
Single-cell goal seeking is a rather simple concept. Excel determines what value in an input cell produces a
desired result in a formula cell. The following example shows you how single-cell goal seeking works.
A goal-seeking example
Figure 37.1 shows the mortgage loan worksheet used in the preceding chapter. This worksheet has four
input cells (C4:C7) and four formula cells (C10:C13). Originally, this worksheet was used for a what-if
analysis example. This example demonstrates the opposite approach. Rather than supply different input cell
values to look at the calculated formulas, this example lets Excel determine one of the input values that will
produce the desired result.
ON the CD-ROM
This workbook is available on the companion CD-ROM. The file is named mortgage loan.xlsx.
FIGURE 37.1
This worksheet is a good demonstration of goal seeking.
Assume that you’re in the market for a new home and you know that you can afford an $1,800 monthly
mortgage payment. You also know that a lender can issue a 30-year fixed-rate mortgage loan for 6.50 percent,
based on an 80-percent loan-to-value (that is, a 20-percent down payment). The question is “What is
the maximum purchase price I can handle?” In other words, what value in cell C4 causes the formula in cell
C11 to result in $1,800? In this simple example, you could plug values into cell C4 until C11 displays
$1,800. With more complex models, Excel can usually determine the answer much more efficiently.
To answer the question posed in the preceding paragraph, first set up the input cells to match what you
already know. Specifically:
n
n
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Enter 20% in cell C5 (the down payment percent)
Enter 360 in cell C6 (the loan term, in months)
Enter 6.5% in cell C7, the annual interest rate
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