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Default Goal Seek Problem

I am having trouble with the goal seek function not converging on a solution.
I can manually manipulate the numbers and make it converge but goal seek
will not converge. There is a circular reference involved (intentionally).
This is a spreadsheet that worked fine as a Excel 2003 worksheet but only
works sometimes works now that I have converted it to a Excel 2007 worksheet.

I have played with the iteration settings (number of iterations and maximum
change) but cannot find any pattern as to why it works sometimes and not
others. Any help would be greatly appreciated.

 
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