Emv

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Finance

Emv is a fast, free finance calculator. Enter Outcome 1 Value, Outcome 1 Probability and Outcome 2 Value to get an instant, accurate result — complete with the formula, a step-by-step worked example, and answers to common questions, all on one page and private to your browser.

Formula

EMV = Σ(Probability × Payoff) = (P1 × Payoff1) + (P2 × Payoff2)
  • Used to evaluate risky decisions
  • EMV > 0 suggests taking the decision
  • Probabilities must sum to 100%

Business Decision

Inputs
  • Outcome 1 Value: 100000 $
  • Outcome 1 Probability: 40 %
  • Outcome 2 Value: -50000 $
  • Outcome 2 Probability: 60 %

40% chance of $100k profit, 60% chance of $50k loss = EMV of $10,000, suggesting the decision is positive.

Frequently asked questions

When should I use EMV?
Use EMV when evaluating decisions with uncertain outcomes and known probabilities to make rational choices.