Microsoft Office Tutorials and References
In Depth Information
Start with the option of purchasing a less expensive car. Select the Payment
cell B7. Select Goal Seek from the What-If Analysis menu on the Data ribbon. See
As you would like to pay only $530 per month, use the Goal Seek to assist you. If
you try it, the Goal Seek tells you that you could (under these circumstances) pur-
chase a car for $20,916.26, keeping in mind that all other factors (loan payback time
period, down payment, interest rate) are presumed to remain the same. Only the
monthly payment has changed compared to our original proposition. See Figure 16.5.
This is powerful; the Goal Seek calculates that if you want to buy a car under those
conditions, and all you can reimburse is $530 a month, you have to go out and buy
yourself a $20,916.26 car.
If you really want the same car, you may want to cancel the Goal Seek and try it
again with a different option. You can choose the down payment for the variable cell.
What kind of a down payment do you have to come up with if you wish to buy the
same car and pay only $530 a month over the course of three years, at an 8 percent
interest rate? Try it. The answer is $5,086.74.
Try a different option. Try adjusting the number of years it will take to pay off
the same loan in order to achieve our goal of a $530 monthly payment. If you use the
Goal Seek again, it will turn out to be 3.22 years
close to 39 months.
In Figure 16.6, you can see that I checked the impact on the interest rate of
paying only $530 a month. As you can see, the desired interest rate to meet this goal
is 3.82 percent.
The Goal Seek is a powerful, useful, and easy-to-use feature. Try one more
example. This is the same example we used before.
FIGURE 16.4 Goal Seek Can Be Found under the Data Ribbon
FIGURE 16.5 Goal Seek for a New Price