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  1. #1
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    Using Solver and Goal Seek

    Hi Guys

    I'm starting to slowly get my head around using Solver and Goal Seek but still struggle with simple equations and calculations. For e.g. I am trying to work out the annual compound rate from the following information:

    starting amount of $1,000,000;
    end amount of $1,102,500;
    term of investment of 2 years

    I have worked it out through other means and the answer is 5% annual compound, but I want to solve this via these excel tools.

    I'm thinking this is a Goal Seek tool (?), but am struggling with the mechanics of it.

    Would anyone be able to assist?

    Many thanks in advance

  2. #2
    WS Lounge VIP sdckapr's Avatar
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    =((end amt)/(starting amt))^(1/(term))-1

    Steve

  3. #3
    WS Lounge VIP sdckapr's Avatar
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    If you really want to use Goal seek, you can do it like this:
    1) in Cell A1 enter the starting amount: 1000000
    2) In Cell A2 enter the formula:
    =A1*(1+B1)^2
    [I have presumed that B1 will have the annual interest]
    The select goal seek
    Set cell: A2
    To value: 1102500
    By changing cell: B1
    [ok]

    [I prefer to use a formula that solves it directly as it is "live" and one can enter the ending value in a cell rather than have to manually enter it into a dialogue box.]

    Steve

  4. The Following User Says Thank You to sdckapr For This Useful Post:

    harrylarry (2014-02-14)

  5. #4
    New Lounger
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    Thank you Steve

    I'm starting to get the hang of it now, as some YouTube videos I was watching were a bit confusing.

    Many thanks

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