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Microsoft® Office Excel® 2007: Data Analysis and Business Modeling, Second Edition by Wayne L. Winston

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Chapter 31. Using Solver for Financial Planning

  • 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?

The Solver feature in Microsoft Office Excel 2007 can be a powerful tool for analyzing financial planning problems. In many financial planning 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 non-interest portion of each monthly payment reduces the unpaid loan balance, we know that the following equation (which I’ll refer to as Equation 1) is true. ...

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