An investment company interested in purchasing a parcel of prime commercial real estate wants to describe the appraised value of the property. The company expects an appraisal of at least $500,000 but not more than $900,000. They believe that all values between $500,000 and $900,000 have the same likelihood of being the actual appraised value.
The first step in selecting a probability distribution is matching the data with a distribution’s conditions. In this case:
These conditions match those of the uniform distribution. The uniform distribution has two parameters: the Minimum ($500,000) and the Maximum ($900,000). You would enter these values as the parameters of the uniform distribution in Crystal Ball (Figure 108, Uniform Distribution).
The distribution in Figure 108, Uniform Distribution shows that all values between $500,000 and $900,000 are equally possible.