This post is part of spreadcheats series.
Today we will learn a fascinating little feature in excel called “goal seek”.
But what good is a feature if we cant find a use for it? So we will build a simple retirement calculator using excel.
Before plunging in to the complex retirement calculations, let us spend a bunch of words understanding what this goal seek is all about.
What is goal seek in excel?
We can think of goal seek as opposite of formulas. Formulas tell you what is the output of a bunch of variables used in an equation (for eg. sumproduct is an equation involving + and *). Goal seek tells you what inputs you need to give in order to get certain output.
For example, you can use goal seek to solve a linear equation or find the internal return rate (IRR) of an investment.
Now that you understand goal seek, let us plan your retirement. 🙂
Make a financial model to estimate your monthly savings to meet retirement goals.
(Note: the image shows commas according to Indian currency formatting.)
In order to proceed, we would need some data, like,
(1) What is your current age?
(2) What is your expected retirement age?
(3) How much do you think you will spend every month when you retire (of course in today’s prices)
(4) Your expectation of inflation (%)?
(5) Your expected return (%) on investments?
Once the data is available, we will need to calculate the following,
I have shown the worksheet on the right with some dummy data.
(6) The yearly expenses at the time of retirement: (3) * (1+(4))^((2)-(1))*12
(7) Corpus required to generate the above amount every year (and leave the principle behind): (6)/(5)
(If these calculations are overwhelming, download the excel retirement calculator workbook here.)
We know how much corpus is needed.
We can use FV() formula to determine the future value of a series of payments made periodically and compounded at a given interest rate.
We know how much the FV() out come should be, but we don’t know how much the input (monthly investment) should be.
This is where goal seek is going to help us.
Let us assume the monthly investment amount will be in cell A5. Let us also assume, the interest rate is in cell A4, retirement age is in A3, current age is in A2.
We will write the FV formula in cell A6 like this = -FV(A4/12,(A3-A2)*12,A5)
(we have to negate FV since it uses weird accounting notations)
Since the cell A5 is blank, the FV will show the value as 0.
Now, we will use goal seek to find out how much cell A5 should have so that A6 will be calculated to the corpus amount required.
Go to Data tab and click on What if analysis and select goal seek. (In excel 2003, it should be in tools menu)
See this screen cast to understand how the goal seek works:
The goal seek window has 3 inputs. The cell you need to change. The cell you want to set and the value to set.
Once you use the goal seek it will find the correct (or closest) value to meet the goal and displays it. If you press OK, the value will be placed in the cell (in our case, in A5)
That is all.
Download the Retirement Calculator Excel Worksheet and play with it
Click here to download the retirement calculator worksheet. Follow the instructions in the workbook to see this example for yourself. Change values to find the amount that you need to save.
Do you find goal seek feature useful?
What do you do with excel goal seek? Do you use it in your modeling, planning worksheets? Tell me your experiences and ideas using comments.
Additional resources:
- Read remaining posts in Spreadcheats series: Become a spreadsheet guru by learning these nifty hacks.
- Excel financial formulas – Help on NPV, FV, PV and more
- Understand why you should start early when it comes to retirement savings
- Buy or rent calculator in Excel – calculate returns on property investments
PS: the retirement calculation steps are derived from this excellent article on smart investor
26 Responses to “Get busy this weekend, with OR XOR AND [Excel Homework]”
first solution for AND
The two numbers are in A1 and B1
= SUBSTITUTE (SUBSTITUTE (A1+B1*9*9, 9, 1), 8, 0)
regards
Stef@n
next solution for OR
=1*SUBSTITUTE (A1+A2;2;1)
regards
Stef@n
last solution for XOR
=1*SUBSTITUTE (A1+A2;2;0)
regards
Stef@n
Or you could make use of the VBA logical operators!
Define the following as custom functions
Public Function BITXOR(x As Long, y As Long)
BITXOR = x Xor y
End Function
Public Function BITAND(x As Long, y As Long)
BITAND = x And y
End Function
Public Function BITOR(x As Long, y As Long)
BITOR = x Or y
End Function
and then use them such:
A B =BITOR(A,B) =BITAND(A,B) =BITXOR(A,B)
0101 0100 0101 0100 0001
an another solution for AND
=1*SUBSTITUTE (SUBSTITUTE (A1+A2;1;0);2;1)
note:
the binary numbers are in A1 and A2 !
regards
Stef@n
I was obviously playing hooky at the beach during the bit-wise math lesson – you lost me at “Understanding bit-wise operations” 🙂
After looking at the above solutions, I find my solution silly, but still:
For the following formulae,
Row 1: headers,
Row 2: OR
Row 3: AND
Row 4: XOR
Column 1: Input 1
Column 2: Input 2
Column 3: Result
OR
{=SUM(IF(MID(A2,ROW(OFFSET($A$1,0,0,LEN(A2),1)),1)+MID(B2,ROW(OFFSET($A$1,0,0,LEN(B2),1)),1)>0,1,0)*10^(LEN(A2)-ROW(OFFSET($A$1,0,0,LEN(B2),1))))}
AND
{=SUM(IF(MID(A3,ROW(OFFSET($A$1,0,0,LEN(A3),1)),1)+MID(B3,ROW(OFFSET($A$1,0,0,LEN(B3),1)),1)=2,1,0)*10^(LEN(A3)-ROW(OFFSET($A$1,0,0,LEN(B3),1))))}
XOR
{=SUM(IF(MID(A4,ROW(OFFSET($A$1,0,0,LEN(A4),1)),1)+MID(B4,ROW(OFFSET($A$1,0,0,LEN(B4),1)),1)=1,1,0)*10^(LEN(A4)-ROW(OFFSET($A$1,0,0,LEN(B4),1))))}
@Anup
Please don't consider your solution silly
Firstly, You are the 3rd person to submit an answer
Secondly, The best formula/function is the one that you know and understand.
I think I have a very tedious solution, which people won't have the patience to do except in small numbers.
I used the same problem setup as "Anup Agarwal"
AND =IF(AND(MID(B2,1,1)="1",MID(C2,1,1)="1"),1,0)&IF(AND(MID(B2,2,1)="1",MID(C2,2,1)="1"),1,0)&IF(AND(MID(B2,3,1)="1",MID(C2,3,1)="1"),1,0)&IF(AND(MID(B2,4,1)="1",MID(C2,4,1)="1"),1,0)
OR =IF(OR(MID(B3,1,1)="1",MID(C3,1,1)="1"),1,0)&IF(OR(MID(B3,2,1)="1",MID(C3,2,1)="1"),1,0)&IF(OR(MID(B3,3,1)="1",MID(C3,3,1)="1"),1,0)&IF(OR(MID(B3,4,1)="1",MID(C3,4,1)="1"),1,0)
=IF(OR(AND(MID(B4,1,1)="1",MID(C4,1,1)="0"),AND(MID(B4,1,1)="0",MID(C4,1,1)="1")),1,0)&IF(OR(AND(MID(B4,2,1)="1",MID(C4,2,1)="0"),AND(MID(B4,2,1)="0",MID(C4,2,1)="1")),1,0)&IF(OR(AND(MID(B4,3,1)="1",MID(C4,3,1)="0"),AND(MID(B4,3,1)="0",MID(C4,3,1)="1")),1,0)&IF(OR(AND(MID(B4,4,1)="1",MID(C4,4,1)="0"),AND(MID(B4,4,1)="0",MID(C4,4,1)="1")),1,0)
Sorry my last post was totally messed up
AND
=IF(AND(MID(B2,1,1)="1",MID(C2,1,1)="1"),1,0)&IF(AND(MID(B2,2,1)="1",MID(C2,2,1)="1"),1,0)&IF(AND(MID(B2,3,1)="1",MID(C2,3,1)="1"),1,0)&IF(AND(MID(B2,4,1)="1",MID(C2,4,1)="1"),1,0)
OR
=IF(OR(MID(B3,1,1)="1",MID(C3,1,1)="1"),1,0)&IF(OR(MID(B3,2,1)="1",MID(C3,2,1)="1"),1,0)&IF(OR(MID(B3,3,1)="1",MID(C3,3,1)="1"),1,0)&IF(OR(MID(B3,4,1)="1",MID(C3,4,1)="1"),1,0)
XOR
=IF(OR(AND(MID(B4,1,1)="1",MID(C4,1,1)="0"),AND(MID(B4,1,1)="0",MID(C4,1,1)="1")),1,0)&IF(OR(AND(MID(B4,2,1)="1",MID(C4,2,1)="0"),AND(MID(B4,2,1)="0",MID(C4,2,1)="1")),1,0)&IF(OR(AND(MID(B4,3,1)="1",MID(C4,3,1)="0"),AND(MID(B4,3,1)="0",MID(C4,3,1)="1")),1,0)&IF(OR(AND(MID(B4,4,1)="1",MID(C4,4,1)="0"),AND(MID(B4,4,1)="0",MID(C4,4,1)="1")),1,0)
@stefan,
I just couldn't get your solutions to work.
01010101010 + 01010101110 = 02020210120
what am i doing wrong?
@anup
...I got yours to work!
@Stephen - I get the same, but Stef@an's second solution for AND does work (at least for the test cases I used)
@ Stephen / Rich
yes , you are right ! - only this works:
OR
=1*SUBSTITUTE (A1+A2;2;1)
XOR
=1*SUBSTITUTE (A1+A2;2;0)
AND
=1*SUBSTITUTE (SUBSTITUTE (A1+A2;1;0);2;1)
@Stef@n - You're answer is really smart, I never knew about the substitute function before. Great Work!
Thx Michael 🙂
yes - it is simply easy 😉
if you add 1 and 1 - excel calculate 2
and then you have to substitute the 2 - new = 0 respectively 1
Here is a good resource for people wanting to learn binary and hexadecimal.
http://justwebware.com/bitwise/bitwise.html
Three that weren't asked for:
NOT
=SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(A1+A2,0,3),1,0),3,1)
EQV
=SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(A1+A2,0,3),2,3),1,0),3,1)
IMP
=SUBSTITUTE(SUBSTITUTE(A1+SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(A2,0,3),1,0),3,1),0,1),2,0)
(was using Daniel Ferry's bitwise file to verify against)
@ Kyle
Not only takes one parameter and inverts 0 -1 and 1-0
Took out the +A2
=SUBSTITUTE(SUBSTITUTE(SUBSTITUTE(A1,0,3),1,0),3,1)
Great solutions!
I'll add two:
NAND =1*SUBSTITUTE (A1+A2,2,0)
NOR=1*SUBSTITUTE(SUBSTITUTE (SUBSTITUTE(A1+A2,0,2),1,0),2,1)
This will work for binary numbers of any size (although the text format mask will have to have as many zeroes as there are digits in the longest addend)
Assume binary #s are in C35 & C36, then add and format as text in C37:
=TEXT(C36+C35,"000000000000")
-sum- = 101112211112
AND - SUBSTITUTE 0s for 1s in -sum-, then sub 1s for 2s
=SUBSTITUTE(SUBSTITUTE(C37,"1","0"),"2","1")
OR - sub 1s for 2s in -sum-
=SUBSTITUTE(C37,"2","1")
XOR - sub 0s for 2s in -sum-
=SUBSTITUTE(C37,"2","0")
Just wandered by:
AND:
=SUBSTITUTE(A1+A2,1,0)/2
Clever, Shane. I like that.
[…] post http://www.excelhero.com/blog/2010/01/5-and-3-is-1.html for examples using Sumproduct, and http://chandoo.org/wp/2011/07/29/bitwise-operations-in-excel/ for examples using Text […]
Hi Chandoo,
I am not (yet) really into bitwise calculation, but I am looking for a way to speed up my vba calculation with very big numbers. Would is ben convenient to use bitwise notation for this?
Best regards,
Ronald (the Netherlands)
p.s. love your country!
@Ronald
I'd suggest asking this in the Chandoo.org Forums
https://chandoo.org/forum/
Attach a sample file with an example of some data and describe what you want to achieve