In this article, you will learn about confidence interval in Excel. You will learn the formula, calculations, and different functions for confidence.
The confidence interval determines the probability of lying a mean value in a range of values. The major advantage of the confidence interval is that it is not time-consuming just like hypothesis testing. And it is far easier to interpret.
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What Is Confidence Interval?
The confidence interval determines the probability of lying a mean value in a range of values. It measures the degree of certainty and uncertainty in a sample. There are upper confidence levels and lower confidence levels. If the interval is narrow, that means the prediction is more accurate.
The formula for Confidence Interval is:
Here,
Where,
Z = The Z Score for the defined Confidence Level.
Benefits of Calculating Confidence Interval in Excel
There are many benefits of calculating Confidence Interval in Excel. They are:
- It is a more simplified process than calculating Confidence Interval manually.
- It saves a lot of time.
- Excel provides different functions for calculating Confidence Intervals which has made the calculations easier.
Excel Functions for Confidence Interval
Excel provides different functions for Confidence Interval. They are:
1. CONFIDENCE Function
It returns the confidence value for the population mean using the normal distribution. The syntax for this function is.
Here, alpha is the level of significance. The value for alpha must be 0 < alpha < 1, standard_dev refers to the standard deviation for the population. And, size refers to sample size.
2. CONFIDENCE.NORM Function
This function calculates the confidence interval for a population mean, using a normal distribution. The syntax of this function is.
Here, alpha is the level of significance. The value for alpha must be 0 < alpha < 1, standard_dev refers to the standard deviation for the population. And, size refers to sample size.
3. CONFIDENCE.T Function
It returns the confidence interval for a population mean and uses a Student’s t distribution for that. The syntax for this function is.
Here, alpha is the level of significance. The value for alpha must be 0 < alpha < 1, standard_dev refers to the standard deviation for the population. And, size refers to sample size.
How to Calculate Confidence Interval in Excel
1. Use Generic Formula to Calculate Confidence Interval in Excel
- Select the cell where you want the Mean >> write the following formula.
=AVERAGE(C5:C12)- Press Enter.
- Select the cell where you want the Standard Deviation (here, I wanted the result for sample standard deviation) >> write the following formula.
=STDEV.S(C5:C12)- Press Enter.
- Select the cell where you want the Sample Size >> write the following formula.
=COUNTA(B5:B12)- Press Enter.
- Select the cell where you want the Z Score >> write the Z Score for your Confidence Level.
- Select the cell where you want the Confidence Value >> write the following formula.
=C17*(C15/SQRT(C16))- Press Enter.
- Select the cell where you want the Confidence Interval >> write the following formula.
=TEXT(C14,"#,##0.00")&" ± "&TEXT(C18,"#,##0.00")- Press Enter.
🔍How Does the Formula Work?
- TEXT(C14,”#,##0.00″): Here, the TEXT function is used to change the format of the value in cell C14 to a thousand separator with 2 decimal points.
- TEXT(C14,”#,##0.00″)&” ± “&TEXT(C18,”#,##0.00”): The Ampersand Operator (&) joins these formulas with the “±” sign.
2. Apply Excel CONFIDENCE Function to Calculate Confidence Interval
- Calculate Mean like the previous method.
- Select the cell where you want the Standard Deviation (here, I wanted the result for population standard deviation) >> write the following formula.
=STDEV.P(C5:C12)- Press Enter.
- Calculate the Sample Size like the previous method.
- Select the cell where you want the Level of Significance >> write the following formula.
=1-0.95- Press Enter.
- Select the cell where you want the Confidence Value >> write the following formula.
=CONFIDENCE(C17,C15,C16)- Press Enter.
- Select the cell where you want the Confidence Interval >> write the following formula.
=TEXT(C14,"#,##0.00")&" ± "&TEXT(C18,"#,##0.00")- Press Enter.
3. Calculate Confidence Interval Using Excel CONFIDENCE.NORM Function
- Find Mean, Standard Deviation, Sample Size, and Level of Significance like the previous method.
- Select the cell where you want the Confidence Value >> write the following formula.
=CONFIDENCE.NORM(C17,C15,C16)- Press Enter.
- Select the cell where you want the Confidence Interval >> write the following formula.
=TEXT(C14,"#,##0.00")&" ± "&TEXT(C18,"#,##0.00")- Press Enter.
4. Use CONFIDENCE.T Function to Calculate Confidence Interval
- Find Mean, Standard Deviation, Sample Size, and Level of Significance like the previous method.
- Select the cell where you want the Confidence Value >> write the following formula.
=CONFIDENCE.T(C17,C15,C16)- Press Enter.
- Select the cell where you want the Confidence Interval >> write the following formula.
=TEXT(C14,"#,##0.00")&" ± "&TEXT(C18,"#,##0.00")- Press Enter.
5. Apply Data Analysis Feature to Calculate Confidence Interval
- Go to the File tab.
- Select Options.
- Select Add-ins tab >> select Go from Manage.
- Add-ins dialog box appears >> check Analysis ToolPak >> check Solver Add-in >> select OK.
- Go to the Data tab >> select Data Analysis.
- Data Analysis dialog box appears >> Select Descriptive Statistics >> select OK.
- A Descriptive Statistics dialog box will appear.
- Then, select Input Range >> check Labels in the first row if your range contains Labels >> select Output Range >> check Summary statistics >> check Confidence Level for Mean and write the Confidence Level >> select OK.
- Finally, you will see a summary will appear with the Confidence Value.
Things to Remember
- You have to remember that CONFIDENCE functions only take numeric values.
- You must use the correct function for calculating Standard Deviation.
Frequently Asked Questions
1. How do you find the 95 percent confidence interval?
To find the 95 percent confidence interval you will have to set alpha as (1-0.95) in the CONFIDENT function.
2. How to calculate Sample Size?
You can use the COUNTA function to calculate the Sample Size.
3. How to find the upper and lower limits of a confidence interval?
For the upper limit, you will have to add the Confidence Value with the Mean. And for the lower limit, you will have to subtract the Confidence Value from the Mean.
Conclusion
So, we have reached the end of this article. We have tried to explain how to calculate confidence interval for different types of data and in different situations in Excel. We hope this article was helpful to you. If you have any questions, feel free to let us know in the comment section below.
Confidence Interval in Excel: Knowledge Hub
- Calculate Confidence Interval
- Make Confidence Interval Graph
- Find Upper and Lower Limits of Confidence Interval
- Find Confidence Interval for Two Samples
- Confidence Interval for Difference in Means
- Calculate Confidence Interval for Population Mean
- Find Confidence Interval Proportion
- Calculate 90 Percent Confidence Interval
- Calculate 95 Percent Confidence Interval
- Determine 99 Percent Confidence Interval
- Linear Regression Confidence Interval
- Forecast Confidence Interval
- Add Confidence Interval Error Bars
- Calculate Confidence Interval Without Standard Deviation
- Calculate Z-Score with 95 Confidence Interval
- Find P-Value from Confidence Interval
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