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MS Excel

This document provides examples for using Excel to calculate probabilities for the standard normal distribution. It shows how to: 1) Find the probability that a z-value is above or between given values using the NORMSDIST function. 2) Find the z-value for a given probability using NORMSINV. 3) Find the probability that a random variable with a normal distribution falls between two values using NORM.DIST. 4) Find the x-value cutoff for a given probability using NORMINV. Functions like NORMSDIST, NORMSINV and NORM.DIST are used to calculate probabilities and values for the normal distribution in Excel.

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59 views

MS Excel

This document provides examples for using Excel to calculate probabilities for the standard normal distribution. It shows how to: 1) Find the probability that a z-value is above or between given values using the NORMSDIST function. 2) Find the z-value for a given probability using NORMSINV. 3) Find the probability that a random variable with a normal distribution falls between two values using NORM.DIST. 4) Find the x-value cutoff for a given probability using NORMINV. Functions like NORMSDIST, NORMSINV and NORM.DIST are used to calculate probabilities and values for the normal distribution in Excel.

Uploaded by

tina furivai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MS EXCEL ASSISTANCE (FOR WEEK 8)

1. Finding probability of standard normal distribution

Example: Use Excel to find the following areas/probabilities under the standard normal
distribution.

a) P( z > 1.45 )
b) P(1.43 < z < 2.11)

Solution:

a) P(z>1.45)
1. Open a new workbook and type the questions in column A as follows:

2. Select cell B1.


3. Click the f x icon from the toolbar to call up the function list.
4. Select NORMSDIST from the Statistical function category. This function returns the
area/probability on the left of a z value.
5. Enter 1.45 in Z box, and click [OK]. This gives the area to the left of 1.45, that is, P (z <
1.45) as shown below.

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6. To find P (z > 1.45), subtract the area from 1.

Therefore, the answer is 1 – 0.926471= 0.0.073529.

b) P(1.43 < z < 2.11)


1. Use the NORMSDIST function and find the area on the left of 2.11. Store this
answer in cell B2.
2. Use the NORMSDIST function and find the area on the left of 1.43. Store this
answer in cell B3.
3. Subtract the answer in cell B3 from B2 and store it in cell C2.

2. Finding Z-score for a given probability

Example: Use Excel to find the value of z0 such that P( Z  z0 )  0.025.

Solution:
1. Open a new worksheet and type the questions as follows:

1. Select cell C1, Click the f x icon and select the Statistical function category.
2. Select the NORMSINV function and enter 0.025 in the Probability box.
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3. Click [OK]. The value of is shown below.

3. Finding probability of normal distribution

Example: The Bureau of Statistics in Fiji conducts periodic surveys to collect information on
the labor market. According to one such survey, the average earnings of workers were $10 per
hour. Assume that the hourly earnings of such workers had a normal distribution with a mean
of $10 and a standard deviation of $1.10. Use Excel to find the probability that the hourly
earnings of a randomly selected retail trade worker were between $8.50 and $10.80.

Solution:
In this example, the problem is to find P( 8.50 < X < 10.80 ) for the given   10 and   1.10.
1. Open a new sheet and type the question in cell A1 as follows:

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2. Select B1 cell, Click the f x icon and select NORM.DIST from the Statistical function
category. This function returns normal cumulative probability for any value of x.

3. Enter 8.50 in the X box, enter 10 in the box Mean, enter 1.10 in the box
Standard_dev, enter 1 (or TRUE) in the box Cumulative and click [OK]. This gives the
area to the left of 8.50, that is, P (x < 8.50) as shown below.

4. Select cell B2, and repeat steps 2 through 3 for 10.80. This gives the area to the left
of 10.80, that is, P (x < 8.50) as shown below.

5. To find P (8.50 < x < 10.80), the area between 8.50 and 10.80, select another blank
cell and subtract the smaller area from the larger area, which gives the answer
0.766471 – 0.086341 = 0.680130.

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4. Finding X-value for a given probability

Example: The scores on a test have mean of 100 and S.D. of 15. If a personnel manager wishes
to select from the top 75% of applicants who take the test, find the cutoff score using Excel.
Assume the variable is normally distributed.

Solution:
Let X be the cutoff score. Then the problem is to find the value of x such that
P( X  x)  0.75 or P( X  x)  0.25 . Also given that   100 and   15 .

6. Open a new sheet and type the question in cell A1 as follows:

1. Select cell C1, click the f x icon and select the Statistical function category.
2. Select the NORMINV function and enter 0.25 in the Probability box, enter 100 in the
Mean box and enter 15 in the Standard_dev box.

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3. Click [OK].

Therefore, the cutoff score is x  89.88  90 .

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