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LOGNORM.DIST

In this comprehensive article, we will explore the LOGNORM.DIST function in Excel, which is used to calculate the lognormal distribution of a given set of values. The lognormal distribution is a continuous probability distribution of a random variable whose logarithm is normally distributed. This function is particularly useful in various fields, such as finance, engineering, and environmental sciences, where variables exhibit a skewed distribution.

LOGNORM.DIST Syntax

The LOGNORM.DIST function has the following syntax:

LOGNORM.DIST(x, mean, standard_dev, cumulative)

Where:

  • x – The value at which you want to evaluate the lognormal distribution.
  • mean – The mean (average) of the natural logarithm of the distribution.
  • standard_dev – The standard deviation of the natural logarithm of the distribution.
  • cumulative – A logical value that determines the type of distribution to return. If TRUE, the function returns the cumulative distribution function (CDF); if FALSE, it returns the probability density function (PDF).

LOGNORM.DIST Examples

Let’s look at some examples of using the LOGNORM.DIST function in Excel.

Example 1: Calculate the probability density function (PDF) of a lognormal distribution with a mean of 3, a standard deviation of 1, and an x value of 20.

=LOGNORM.DIST(20, 3, 1, FALSE)

This formula returns the PDF value of 0.0113.

Example 2: Calculate the cumulative distribution function (CDF) of a lognormal distribution with a mean of 2, a standard deviation of 0.5, and an x value of 10.

=LOGNORM.DIST(10, 2, 0.5, TRUE)

This formula returns the CDF value of 0.9772.

LOGNORM.DIST Tips & Tricks

Here are some tips and tricks to help you effectively use the LOGNORM.DIST function in Excel:

  • Remember that the mean and standard deviation parameters refer to the natural logarithm of the distribution, not the original values.
  • Use the LOGNORM.DIST function to model variables that are always positive and have a skewed distribution, such as stock prices, real estate values, or product sales.
  • If you need to calculate the inverse of the lognormal distribution, use the LOGNORM.INV function.

Common Mistakes When Using LOGNORM.DIST

Here are some common mistakes to avoid when using the LOGNORM.DIST function:

  • Using the original values for the mean and standard deviation parameters instead of the natural logarithm of the distribution.
  • Forgetting to specify the cumulative parameter as either TRUE or FALSE. If omitted, Excel will return an error.
  • Using negative values for the x parameter, as the lognormal distribution is only defined for positive values.

Why Isn’t My LOGNORM.DIST Working?

If you’re having trouble with the LOGNORM.DIST function, consider the following troubleshooting tips:

  • Ensure that all required parameters (x, mean, standard_dev, and cumulative) are provided in the function.
  • Check that the mean and standard deviation parameters are based on the natural logarithm of the distribution, not the original values.
  • Verify that the x parameter is a positive value, as the lognormal distribution is only defined for positive values.
  • Make sure the cumulative parameter is specified as either TRUE or FALSE. If omitted, Excel will return an error.

LOGNORM.DIST: Related Formulae

Here are some related Excel functions that you may find useful when working with lognormal distributions:

  • LOGNORM.INV: Calculates the inverse of the lognormal cumulative distribution function for a given probability, mean, and standard deviation.
  • NORM.DIST: Calculates the normal distribution (Gaussian distribution) for a given set of parameters.
  • NORM.INV: Calculates the inverse of the normal cumulative distribution function for a given probability, mean, and standard deviation.
  • EXPONDIST: Calculates the exponential distribution for a given set of parameters, which is useful for modeling the time between events in a Poisson process.
  • GAMMADIST: Calculates the gamma distribution for a given set of parameters, which is useful for modeling variables with skewed distributions and a lower bound of zero.

By understanding the LOGNORM.DIST function and its related functions, you can effectively analyze and model variables with lognormal distributions in Excel. This powerful tool can help you make informed decisions in various fields, such as finance, engineering, and environmental sciences.

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