Expected Monetary Value Calculator
Decision analysis with probability-weighted outcomes and risk assessment
Expected Monetary Value Analysis
EMV analysis helps quantify decisions by multiplying the monetary value of each possible outcome by its probability of occurrence. Make informed decisions under uncertainty with comprehensive risk assessment and scenario analysis.
🎯 Decision Analysis
Compare alternatives with probability-weighted expected values
⚖️ Risk Assessment
Calculate variance, standard deviation, and risk scores for each option
📊 Sensitivity Testing
Analyze how changes in assumptions affect decision outcomes
Decision Configuration
Ready for EMV Analysis
Configure your decision alternatives and outcomes to calculate expected monetary values
EMV Concepts & Applications
📊 EMV Formula
Components
EMV combines the probability of each outcome with its monetary value to determine expected returns.
Decision Criteria
Choose the alternative with the highest EMV, considering risk tolerance and strategic factors.
Risk Assessment
Standard deviation and variance help quantify uncertainty and risk levels.
🎯 Applications
Project Selection
Compare multiple project alternatives with uncertain outcomes.
Investment Decisions
Evaluate investment opportunities with varying return probabilities.
Risk Management
Quantify potential losses and gains from risk mitigation strategies.
Make-or-Buy Analysis
Compare insourcing vs outsourcing with cost uncertainties.
💡 EMV Best Practices
Realistic Probabilities
Use data-driven probability estimates based on historical data, expert judgment, or market research.
Comprehensive Outcomes
Include all possible outcomes and ensure probabilities sum to 100% for each alternative.
Risk Consideration
Analyze not just expected values but also variance and risk tolerance levels.
Frequently Asked Questions
When should I use EMV analysis?
EMV is ideal for decisions with multiple possible outcomes where probabilities can be reasonably estimated, such as investment decisions, project planning, and risk assessment.
How do I estimate probabilities?
Use historical data, expert judgment, market research, or Monte Carlo simulations. Be conservative and document your assumptions.
What if I can't assign accurate probabilities?
Use ranges, conduct sensitivity analysis, or consider qualitative factors. The process of estimating probabilities itself provides valuable insights.
Should I always choose the highest EMV?
Not necessarily. Consider risk tolerance, strategic alignment, resource constraints, and other qualitative factors alongside EMV.