In a previous post, we know that Khawla has a goal: to accumulate AED100,000 in her bank account by the end of 2011. Her only source of income is her salary. Obviously, she can achieve this goal by limiting her monthly expenses (cash outflows).

There is a tool in Microsoft Excel that can help her set her goal. This tool is called **Goal Seek** which can be found under the **Tools** menu:

Assuming that Khawla set her goal for the year 2011, and that her monthly salary is AED10,000, then in a year she can accumulate AED120,000 (10,000*12). But, since she incurs monthly expenses, she sets her goal to accumulate at least AED100,000. How much must her expenses in 2011 be if she wants to accumulate AED100,000 by the end of the year?

Using Microsoft Excel, let us draw the following table:

In the table:

(1) Inflows = the accumulated monthly salary in 2011 = AED10,000*12 = AED120,000

– We can write in the empty cell next to “Inflows” the following: **=10,000*12**

– We will call this cell “**A**“.

– Microsoft Excel will do the calculation. We hit **Enter** in the keyboard to read the answer.

(2) Outflows = total monthly expenses in year 2011

– Leave the cell to its right empty. **Goal Seek** will later write the answer for you.

– We will call this cell “**X**“.

(3) Goal = Inflows – Outflows = **A-X **= AED120,000-X = AED100,000

– We must define this equation in the cell to the right of “Goal”. Write **=**, then select the cell **A** and hit **–** in your keyboard and then select **X**, and hit **Enter**.

Without using Goal Seek, we can find **X**. It equals to AED20,000.

Now, in Microsoft Excel, click on **Tools** from the **menus bar **and select **Goal Seek**. You must see the following command window:

**Set cell:** is our **Goal** cell. Select it from the **Goal Seek** command window by clicking on the icon next to **Set cell:** …

… and then select it and hit **Enter**:

The goal is to accumulate AED100,000. We write 100,000 in the box next to **To**** ****value:**

**By changing cell:** is cell **X**, the **Outflows**. We select it, hit **Enter**, and then clicking on **OK**. Microsoft Excel found the answer:

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Tags: Goals, Microsoft Excel, Planning

This entry was posted on June 23, 2010 at 4:10 PM and is filed under Tips. You can follow any responses to this entry through the RSS 2.0 feed.
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