DEFINITION of 'Goal Seeking'

The process of finding the correct input when only the output is known. A goal-seeking entrepreneur might ask him or herself: "How much money do I have to earn per hour to gross $100,000 this year?" He or she knows the desired output, $100,000, but will have to work backwards to determine the desired input by figuring out how many hours he or she is able and willing to work in a year and then how much he or she needs to earn per hour, along with any other factors which may affect the final output.

BREAKING DOWN 'Goal Seeking'

To solve more complex goal-seeking problems, business people commonly rely on computer software. The spreadsheet program Microsoft Excel has a goal-seeking tool built in that allows the user to determine the correct input value for a formula when the desired output is known. This feature can be used, for example, to determine the interest rate a borrower would need to qualify for (the input) if he or she only knows how much he can afford to pay per month (the output).



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