Goal Seeking

Goal Seeking

Key takeaways

• Goal seeking finds the input value needed to produce a known output.
• It is commonly used in spreadsheet programs as part of what‑if analysis.
• Built‑in goal‑seek tools work when a single input variable must be solved; use more advanced tools (e.g., Solver) for multiple unknowns.

What is goal seeking?

Goal seeking is the process of working backward from a known result to determine the input that produces that result. It’s a form of what‑if analysis where you ask, “If the outcome should be X, what must the input be?” Common uses include finding an interest rate that produces a given monthly payment or determining an hourly rate needed to reach a target annual income.

How goal seeking works

Goal seeking requires a formula that links inputs to an output. The software iteratively adjusts the chosen input until the formula’s result matches the target output. This approach only solves for one unknown variable at a time; problems with two or more unknowns require different methods.

Using Goal Seek in Microsoft Excel

1. Set up the worksheet with clear labels and the formula that produces the output (target cell).
2. Enter known values in their cells and leave the cell to be solved for with an initial guess.
3. Open the Goal Seek tool: Data → What‑If Analysis → Goal Seek.
4. In the Goal Seek dialog, specify:
5. Set cell: the output cell containing the formula.
6. To value: the desired output value.
7. By changing cell: the single input cell Excel should adjust.
8. Run Goal Seek. Excel iteratively adjusts the input until the output equals (or closely approximates) the target.

Example scenarios

• Loan interest rate: Given a monthly payment and loan term, use goal seek to find the interest rate that yields that payment.
• Income target: An entrepreneur who wants to gross $100,000 can use goal seeking to compute the required hourly rate given an expected number of billable hours.

Limitations and alternatives

• Goal Seek solves for only one variable. If you need to solve for multiple inputs, use Excel’s Solver add‑in or other optimization tools.
• Results depend on the formula structure and an initial guess; poorly conditioned formulas may not converge.

Practical tips

• Label cells clearly so the target and changing cells are obvious.
• Check the formula dependency to ensure the changing cell actually affects the target cell.
• If Goal Seek fails to converge, try a different initial guess or use Solver for more robust control over constraints and multiple variables.