Enter the maximum cost ($) and the probability of cost (%) into the Expected Cost Calculator. The calculator will evaluate and display the Expected Cost. 

Expected Cost Formula

The following formula is used to calculate the Expected Cost. 

EC = MC * P(x)/100
  • Where EC is the Expected Cost ($)
  • MC is the maximum cost ($) 
  • P(x) is the probability of cost (%) 

To calculate the expected cost multiply the maximum cost by the probability of the cost.

How to Calculate Expected Cost?

The following example problems outline how to calculate Expected Cost.

Example Problem #1:

  1. First, determine the maximum cost ($). The maximum cost ($) is given as 5,000.
  2. Next, determine the probability of cost (%). The probability of cost (%) is provided as 70.
  3. Finally, calculate the Expected Cost using the equation above: 

EC = MC * P(x)/100

The values given above are inserted into the equation below:

EC = 5000 * .70 = 2500 ($)

Example Problem #2: 

The variables needed for this problem are provided below:

maximum cost ($) = 8,000

probability of cost (%) = 25

Entering these values and solving gives:

EC = MC * P(x)/100 = 2000 ($)