Chapter 1

Performing What-If Scenarios


check Doing what-if analysis in one- and two-variable data tables

check Creating and playing with different scenarios

check Performing goal seeking

check Using the Solver utility

Because electronic spreadsheet formulas are so good at automatically updating their results based on new input, they have long been used (and sometimes, misused) to create financial projections based on all sorts of assumptions. Under the guise of what-if analysis, you will often find the number crunchers of the company using Excel as their crystal ball for projecting the results of all sorts of harebrained schemes designed to make the company a fast million bucks.

As you start dabbling in this form of electronic fortune-telling, keep in mind that the projections you get back from this type of analysis are only as good as your assumptions. So when the results of what-if analysis tell you that you’re going to be richer than King Midas after undertaking this new business venture, you still need to ask yourself whether the original assumptions on which these glowing projections ...

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