Goal Seek, Looking for some help with modeling

REJB123's picture
Rank: Monkey | 39

Hey all, getting ready for technical interviews coming out of undergrad here and I'm looking for some help with goalseek, I understand it's use but I'm struggling to understand it's role in this situation -- for example, if you were given a set of assumptions that required you to find an asset's purchase price and entry cap rate, but they only provided a levered IRR requirement to go off of, how would you go about doing this?

I've tried just assuming a purchase price to get a loan amount to find some annual debt service payments - then using these levered cash flows to goal seek a purchase price (rough example of this below), but I'm not sure if this is the right way to go about it

I would really appreciate any insight anyone might be able to provide on this

Comments (12)

Sep 10, 2019

just for a little more clarity, here's what exactly was stated as a part the prompt

Most Helpful
Sep 10, 2019

You can use NPV and run the IRR as the discount rate to back into a purchase price. From there getting the cap rate is pretty self-explanatory

    • 2
Sep 10, 2019

I appreciate the quick response, although I don't totally follow -- do you have any examples in excel that you could PM? I think my confusion is on what #'s you would use to run your NPV calc. From what I understand you're saying you would use =NPV(required Lev IRR here, then some set of values here) to find the purchase price?

Sep 10, 2019

https://1drv.ms/x/s!AnxC75Rrk7R7gTQCjEtJj4HxbSBK
here's a link to my run through, if anyone has any time to check this over I would really appreciate any feedback

Sep 12, 2019
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