"What if" Questions and Excel Formulas

Excel formulas can easily be used to answer "What if" - type questions such as:

• "What if I spent this amount for a new car versus that amount, how much will the taxes be?"
  
  
• "What if I worked this number of hours versus that number in a week, how much would I earn?"

To answer questions like these easily with Excel, you need to enter the cell references of the data into the formulas rather than the data itself.

Cell references identify the location of your data in the spreadsheet, such as B4 or B5.

Example - Excel Formula using Cell References

= B4*B5

In this example the formula multiplies the contents of cell B4 times the contents of cell B5.

Referring to the image to the right, our example is arranged in the following manner:

• cell B4 holds the cost of a car
• cell B5 contains the tax rate
• the formula in cell B6 calculates the amount of tax that will be paid for this car.

By using cell references in the formula you can change the value in cell B4, for example, without affecting the formula. Once the value in cell B4 changes, the answer to your formula will change accordingly in cell B6.

Using cell references rather than actual numbers in formulas, allows you to get a variety of answers to your question.

Asking "What if" questions are very useful in business when planning new projects. Cost projections for different scenarios can be quickly created and the results compared.



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