I’ve introduced many friends, colleagues, and students to the Goal Seek feature in Excel, and I usually get a similar reply. “Woah!” is a common exclamation; “how cool!” has come up from time to time. No matter the person, most everyone is surprised that they hadn’t heard of the tool before, and lament the fact that they hadn’t known about it sooner.
So, dear reader, I am excited to introduce you too! Here is an introduction to the Goal Seek tool with step-by-step instructions.
What is Goal Seek?
For one, Goal Seek is about simplification. It takes a complicated algebra problem and solves it for you, not only simplifying the equation, but in turn simplifying your life!
Why use Goal Seek?
Have you ever had to solve an algebra problem – one which involves some pretty difficult math – to find the value of "x"? Well, if so, Goal Seek will save you tons of time by doing the computation in seconds.
I should note: it is very helpful, for the sake of understanding, to know how to solve an algebra problem (think of your teacher’s gentle reminder to show your work); however, this tool will allow you to skip the arduous pen and paper if you’re feeling pressed for time.
How do I use Goal Seek?
Using Goal Seek requires some setup. In any algebra problem, you have two sides of an equation: one side with an unknown or a variable, or an "x", and another side that equals a number, or an expression that equals a number. To refresh your memory, (2*x)+1 = 7 is an example of an algebra problem - we have to solve for the "x" such that (2*x) + 1 is equal to 7. Goal Seek solves for the "x". How would you set this up in Excel? See the below screenshot!
In cell A1, we setup the equation (2*x)+1, and we link the "x" variable to cell F1, which is currently blank. In the screenshot above, since F1 is blank, the formula in cell A1 is reading it as 0, and thus the result in A1 is "1" (i.e. (2*0)+1).
Now, I know what you’re likely thinking, and I must agree – you’re right to think that this example is a simple algebra problem that doesn't require any Excel. So let me illustrate how Goal Seek becomes extremely helpful with a harder algebra problem. Let's look at the algebra problem below.
(Note: for those students taking a finance class, the above problem is an example where you are finding the yield to maturity (the 'x') on a 5-year bond with a price of $100, par value of $100, and a coupon rate of 10%, compounded annually).
Solving for "x" becomes more of a challenge if you try and solve this example by hand. If you want to take a stab with how to set this up in Excel, please do so! If you get stuck on how to set it up, please see the below gif.
I do want to note that goal seek only works for 1 variable algebra problems. For algebra problems with multiple variables, you might have to resort to using Solver, which is another Excel tool (one I will cover in a later blog post).
And that’s it! From experience, this simple tool can be transformative. That’s the beauty of Excel: the more tools you have in your Excel toolbox, the quicker and more efficient you become. If you’re looking to refine your Excel skills further, you should set up a session with me or another Excel tutor!
Enrique graduated with a BS in Finance and Statistics from New York University's Stern School of Business and earned his MBA from Columbia Business School, graduating with Dean's Honors with Distinction. Enrique has been running a data analytics consulting startup out of the Columbia Startup Lab Incubator since he completed his MBA.
Enrique has years of experience tutoring MBA students in various subjects including accounting, statistics, business, and Excel. He is a CFA Charterholder, so he is comfortable helping with anything finance-related as well. Witnessing his students achieve academic and professional success makes Enrique's role as a tutor extremely fulfilling.
Studying business, finance or considering doing an MBA? Check out some of our previous blog posts below!