# Thread: Using Solver and Goal Seek

1. ## 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?

2. =((end amt)/(starting amt))^(1/(term))-1

Steve

3. 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. 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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