Excel like a finance pro.
Statistical function
EXPON.DIST
Returns the exponential distribution.
When to use it
The exponential distribution: the time between events in a Poisson process, given the rate lambda. Cumulative gives the probability the wait is at most x.
The shape of it
- Syntax
=EXPON.DIST(x, lambda, cumulative)
Worked examples
Probability of a short wait
=EXPON.DIST(0.2,10,TRUE) → 0.864664717
With 10 arrivals per unit time, an 86.5% chance the next one comes within 0.2.
Density
=EXPON.DIST(0.2,10,FALSE) → 1.353352832
The density at 0.2.
Survival
=1-EXPON.DIST(5,0.1,TRUE) → 0.60653066
Chance a component with a 0.1 failure rate survives past 5.
Worth knowing
- Lambda is a rate, so its mean wait is 1/lambda.
- Random wait times: -LN(RAND())/lambda.
- Memoryless: the chance of the next event does not depend on how long you have waited.
Where it goes wrong
- #NUM! when x is negative or lambda is not positive.
- Confusing rate and mean gives results off by a large factor.
Related
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