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Expected Monetary Value Formula

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Expected Monetary Value represents the average financial outcome when considering the probability of various possible outcomes occurring. Check FAQs

EMV = μ < i (Po, Imp)

EMV - Expected Monetary Value?Po - Probability?Imp - Impact?

Expected Monetary Value Example

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Here is how the Expected Monetary Value equation looks like with Values.

Here is how the Expected Monetary Value equation looks like with Units.

Here is how the Expected Monetary Value equation looks like.

78000 = μ < i (0.6, 130000)

78000 = μ < i (0.6, 130000)

78000 = μ < i (0.6, 130000)

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Expected Monetary Value Solution

Follow our step by step solution on how to calculate Expected Monetary Value?

FIRST Step Consider the formula

EMV = μ < i (Po, Imp)

Next Step Substitute values of Variables

∴

EMV = μ < i (0.6, 130000)

Next Step Prepare to Evaluate

∴

EMV = μ < i (0.6, 130000)

LAST Step Evaluate

∴

EMV = 78000

Expected Monetary Value Formula Elements

Variables

Functions

Expected Monetary Value

Expected Monetary Value represents the average financial outcome when considering the probability of various possible outcomes occurring.

Symbol: EMV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Expected Monetary Value

Probability

Probability represents the probability of the ith outcome occurring.

Symbol: Po

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Probability

Impact

Impact is the financial result of the outcome and can range from any negative number to any positive number, depending on if the impact is positive or negative on the firm’s bottom line.

Symbol: Imp

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Impact

multi

Multiplication is the process of calculating the product of two or more numbers.

Syntax: multi(a1, …, an)

Other formulas in Capital Budgeting category

Go Payback Period

PBP = \frac{Initial Invt}{C f}

Go Cost of Retained Earnings

C RE = (\frac{D}{P c}) + g

Go Cost of Debt

R d = Int.E \cdot (1 - T r)

Go After-Tax Cost of Debt

ATCD = (R f + CS P) \cdot (1 - T r)

How to Evaluate Expected Monetary Value?

Expected Monetary Value evaluator uses Expected Monetary Value = multi(Probability,Impact) to evaluate the Expected Monetary Value, The Expected Monetary Value is a concept commonly used in decision theory and risk analysis to quantify the potential outcomes of uncertain events or decisions in terms of their monetary value. Expected Monetary Value is denoted by EMV symbol.

How to evaluate Expected Monetary Value using this online evaluator? To use this online evaluator for Expected Monetary Value, enter Probability (Po) & Impact (Imp) and hit the calculate button.

FAQs on Expected Monetary Value

What is the formula to find Expected Monetary Value?

The formula of Expected Monetary Value is expressed as Expected Monetary Value = multi(Probability,Impact). Here is an example- 78000 = multi(0.6,130000).

How to calculate Expected Monetary Value?

With Probability (Po) & Impact (Imp) we can find Expected Monetary Value using the formula - Expected Monetary Value = multi(Probability,Impact). This formula also uses Multiplication Function function(s).

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Expected Monetary Value Formula

Expected Monetary Value Example

Expected Monetary Value Solution

Expected Monetary Value Formula Elements

Other formulas in Capital Budgeting category

How to Evaluate Expected Monetary Value?

FAQs on Expected Monetary Value

Variable Name