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 ($)
- P(x) is the probability of cost (%)
How to Calculate Expected Cost?
The following example problems outline how to calculate Expected Cost.
Example Problem #1:
- First, determine the maximum cost ($). The maximum cost ($) is given as 5,000.
- Next, determine the probability of cost (%). The probability of cost (%) is provided as 70.
- Finally, calculate the Expected Cost using the equation above:
EC = MC * P(x)/100
The values given above are inserted into the equation below:
EC = 5000 * .70 = 2500 ($)
Example Problem #2:
The variables needed for this problem are provided below:
maximum cost ($) = 8,000
probability of cost (%) = 25
Entering these values and solving gives:
EC = MC * P(x)/100 = 2000 ($)
