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Using What-If Analysis

What-if analysis is perhaps the most basic method for interrogating your worksheet data. With what-if analysis, you first calculate a formula D, based on the input from variables A, B, and C. You then say, “What if I change variable A? Or B or C? What happens to the result?”

For example, Figure 14.1 shows a worksheet that calculates the future value of an investment based on five variables: the interest rate, period, annual deposit, initial deposit, and deposit type. Cell C9 shows the result of the FV() function. Now the questions begin: What if the interest rate was 7%? What if you deposited $8,000 per year? Or $12,000? What if you reduced the initial deposit? Answering these questions is a straightforward matter of changing the appropriate variables and watching the effect on the result.


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