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

Watch the video! (5:18 min)

Download the example to work along with the video.

#### 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.

#### 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:

- Select the
**Formula** tab. - Click the
**Insert Function** command. A dialog box appears. - Select
**PMT**. - Click
**OK**. A dialog box appears. - Insert your cursor in the
**first field**. A description of the needed information appears at the bottom of the dialog box.

- Select the cell in the spreadsheet with the needed information.
- Insert your cursor in the
**next field**. A description about the needed information appears at the bottom of the dialog box. - Select the cell in the spreadsheet with the needed information.
- Repeat the last two steps until all of the necessary information is entered in the dialog box.
- Click
**OK**.