Using What-If Analysis

In Excel what if analysis lets you answer questions with data. With what if analysis Excel also lets you experiment with data.

What-if analysis

Example

You need a loan to buy a new car. You know how much money you want to borrow, how long of a period of time you want to take to pay off the loan (the term), and what payment you can afford to make each month. But what you need to know is what interest rate you need to qualify for to make the payment $400 per month. In the image below, you can see that if you didn’t have interest and just divided this $20,000 into 60 monthly payments, you would pay $333.33 per month. The what-if analysis tool will allow you to easily calculate the interest rate.

Example

Where did the formula come from?

The formula that appears in cell B5 in the example image is a function. It isn't part of the what-if analysis tool, so you will need to understand functions thoroughly before you use what-if analysis. For the example scenario described above, you need a formula that will calculate the monthly payment. Instead of writing the formula yourself, you can insert a function to do the calculation for you.

To insert a payment function:

Payment Function Example