Given Information:
Mean = μ = $600
Standard deviation = σ = $100
x = $850
Required Information:
Using Excel calculate P(x > $850) = ?
Answer:
P(x > $850) = 0.62%
Explanation:
The Microsoft Excel has a built-in function "NORMDIST" that calculates the normal distribution for a given mean and standard deviation.
Syntax:
NORMDIST(x, mean, standard deviation, cumulative flag)
Where x is the value for which you want to find the distribution.
Cumulative flag = TRUE or FALSE
Procedure:
Select the cell where you want to display the result.
In the Formula tab, click the Insert function icon.
Type NORMDIST in the search for a function field and select ok.
Enter the required input parameters x, mean, standard deviation and flag or enter the cell numbers of the input parameters and press ok.
Solution:
P(x > $850) = 1 - P(x ≤ $850)
In MS Excel,
P(x ≤ $850) =NORM.DIST(B2,B3,B4,TRUE)
where B2 = 850, B3 = 600, and B4 = 100 and flag = TRUE
P(x ≤ $850) = 0.99379
P(x > $850) = 1 - 0.99379
P(x > $850) = 0.00621 = 0.62%
