Chapter 10: What If Analysis

Using Goal Seek

Exercise 1: Using Goal Seek
Using Scenario Manager
Exercise 2: Using Scenario Manager

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Chapter 10: What If Analysis

In this chapter, you will learn how to analyze data using Scenario Manager and Goal Seek.
These tools help you perform What-if analysis to see how changes to values in specific cells
affect the outcome of formulas that depend on these cells.
Goal Seek, as the name suggests, allows you to find which value for a cell or field in a formula
will yield the desired results. For example, if you are trying to find out the price at which the
sales will be maximized, you can use Goal Seek.
Scenarios, as the name suggests, are different possible scenarios or cases for a given formula.
For example, you may want to find out the best and worst case sales scenarios for winter wear
given the weather forecasts. You create and analyze different scenarios using Scenario
manager. You can use up to 32 variables in Scenario Manager.
You will need the data files or workbooks that came with this course for some of the exercises in
this chapter. Please download the workbooks if you have not already done so.

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Using Goal Seek

The Goal Seek tool helps you to find the value of an unknown variable in a formula by plugging
in the values of the known variables and the desired result of the formula.
To use Goal Seek, you must have a formula with at least one unknown variable already set up
in the worksheet.
Select What If Analysis tool in Data Tools group on the Data tab.

Click on Goal Seek.

Excel displays the Goal Seek dialog box.

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In the Set Cell field, enter the cell reference that contains the formula you want to analyze.
Enter the desired value or outcome of the formula in the To Value field.
Enter or select the cell which represents the unknown variable in the formula in the By
Changing Cell field
Click OK.
Excel calculates and displays the value of the unknown variable which will give you the desired
formula result.

Exercise 1: Using Goal Seek

In this exercise, you will learn how to use Goal Seek tool.
You need the WhatIfAnalysis workbook located in your practice files for this exercise. The
worksheet estimates monthly loan repayment amount for a given loan amount, duration and
interest rate.
Open the file and follow the steps:
1. Select cell B2
2. Select What If Analysis tool in Data Tools group on the Data tab
3. Click on Goal Seek. Excel displays the Goal Seek dialog box
4. In the Set Cell field, Excel displays B2 (The monthly repayment amount or EMI). If it
shows some other cell, delete it and type B2
5. Type 10000 in the To Value field as you do not want to pay more than Rs.10000 per
month
6. Type B5 (interest rate field) in the By Changing Cell field
7. Click OK
8. Excel displays the interest rate at which the EMI will be Rs.10,000
9. Save and Close the workbook.
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Using Scenario Manager

You use Scenario manager to analyze different possible outcomes of the formula depending on
how certain values or variables are likely to behave under certain conditions.
Let us explore with the help of an example. Suppose you want to take a home loan from bank.
You want to find out your best case (lowest) and worst case (highest) possible monthly
payments for the loan. You know that the interest rate on the loan can go up or down in future
depending on the state of the economy. From the past experience, you know that the interest
rate is unlikely to go below or above a certain value. You can use this information in the
Scenario Manager to construct the best and worst repayment scenarios for your loan.
Before you use the Scenario Manager, you need a formula whose result you will monitor using
the Scenario Manager. Then you will add a scenario for different values of the known variables
(your interest rate, for example). Finally, you will run the Scenario Manager to generate results.
Select What If Analysis tool in Data Tools group on the Data tab and Click on Scenario
Manager.

Excel displays the Scenario Manager dialog box.

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Click Add button to create a new scenario. Excel opens the Add Scenario dialog box.

In the Scenario name text entry box, type the scenario name and then click inside the
Changing cells text entry box.
Select the cell which has the variables whose value you want to change for analyzing the
formula result. You can select multiple cells by pressing CTRL key.
You can protect the scenario by checking the Prevent changes and/or the Hide check boxes.
Click OK. Excel displays the Scenario values dialog box.
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It displays all cells whose value will be changing. Enter the expected value for each cell or
variable for the scenario you just created. For example, if you think the best case scenario is to
get 9% interest rate, enter .09 (9%). Click Add to add more scenarios. Repeat the steps for
each scenario you want to create.
Click OK to finish adding scenarios. Excel displays the Scenario Manager dialog box with your
scenarios.

To see the result for any scenario, double click on its name or click the Show button.
Click on Summary to view results for all scenarios summarized in a single place. Excel displays
the Scenario Summary dialog box.

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Make sure the Result cells box shows the cell with your formula.
Select the Scenario Summary radio button and click OK. Excel displays the summary result in
a new worksheet.

Exercise 2: Using Scenario Manager

In this exercise, you will learn how to use Scenario Manager Tool.
You need the WhatIfAnalysis workbook located in your practice files for this exercise. The
worksheet estimates monthly loan repayment amount for a given loan amount, duration and
interest rate. You will create a best case and a worst case scenario for loan repayment by
varying the interest rate.
Open the file and follow the steps:
1. Select cell B2
2. Select What If Analysis tool in Data Tools group on the Data tab
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3. Click on Scenario Manager. Excel displays the Scenario Manager dialog box
4. Click Add button to create a new scenario. Excel opens the Add Scenario dialog box
5. In the Scenario name text entry box, type Best
6. Click inside the Changing cells text entry box
7. Select / Enter cell B5
8. Select the Prevent changes check box
9. Click OK. Excel displays the Scenario values dialog box.
10. Enter .09 (9% interest rate) as this is the lowest interest rate expected during the life of
the loan.
11. Click Add to add another scenario
12. In the Scenario name text entry box, type Worst
13. Click inside the Changing cells text entry box
14. Select / Enter cell B5
15. Select the Prevent changes check box
16. Click OK. Excel displays the Scenario values dialog box.
17. Enter 0.14(14% interest rate) as this is the highest interest rate expected during the life
of the loan
18. Click OK. Excel displays the Scenario Manager dialog box with the two scenarios.
19. Double click on Best to see the best case repayment amount
20. Select Worst and click the Show button to view the worst case repayment amount
21. Click Summary button. Excel displays the Scenario Summary dialog box
22. Type B2 in the Result cells text entry box
23. Select the Scenario Summary radio button and click OK
24. Excel displays the summary result in a new worksheet
25. Save and Close the workbook

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