Chapter 33. Using Solver for financial planning

Questions answered in this chapter:

  • Can I use Solver to verify the accuracy of the Excel PMT function or to determine mortgage payments for a variable interest rate?

  • Can I use Solver to determine how much money I need to save for retirement?

Solver can be a powerful tool for analyzing financial planning problems. In many of these types of problems, a quantity such as the unpaid balance on a loan or the amount of money needed for retirement changes over time. For example, consider a situation in which you borrow money. Because only the noninterest portion of each monthly payment reduces the unpaid loan balance, you know that the following equation (Equation 1) is true:

(Unpaid loan balance at end of period ...

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