Enter the total impact of occurrence ($) and the probability of the event to occur (%) to determine the expected monetary value.
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Expected Monetary Value Formula
The following equation can be used to calculate an expected monetary value of an event or asset.
M = C * P/100
- Where M is the expected monetary value
- C is the total monetary impact of an event
- P is the probability of the event occurring
Expected Monetary Value Definition
An expected monetary value is defined as the expected value earned in currency or monetary units of an event based on the total value of the event and the chance of that event occurring.
Expected Monetary Value Example
How to calculate an expected monetary value?
- First, determine the total monetary impact.
Determine the total monetary value of a specific event should it occur.
- Next, determine the chance.
Calculate the probability of that event actually happening.
- Finally, calculate the expected monetary value.
Calculate the expected monetary value using the equation above.
This term is used to describe the expected value of an event given the total value of the event and the probability that the event actually happens.
Lets look at an example. Let’s say the even we are looking at is you winning a free bet. The value of winning is 100$, but the probability is 50%. So the expected outcome is that on average you will receive 100$*50% = $50.00.