Do you need customer support or technical assistance? Click here to submit a support ticket...
  • Page:
  • 1

TOPIC: Question EMV calculation question

EMV calculation question 3 years 5 months ago #4250

  • Ashwin Kini
  • Ashwin Kini's Avatar Topic Author
  • Offline
  • Fresh Boarder
  • Fresh Boarder
  • Posts: 16
  • Thank you received: 0
How is the following type of question calculated?
If a business has 50% chances to earn $5 million and 30% chances to lose $2.5 million
What is the EMV?

EMV calculation question 3 years 5 months ago #4251

  • Cornelius Fichtner
  • Cornelius Fichtner's Avatar
  • Offline
  • Administrator
  • Administrator
  • PrepCast Instructor
  • Posts: 1106
  • Karma: 35
  • Thank you received: 184
Ashwin,

Allow me to ask a question in return... where is this from and what do they say the answer is?
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC

EMV calculation question 3 years 5 months ago #4252

  • Ashwin Kini
  • Ashwin Kini's Avatar Topic Author
  • Offline
  • Fresh Boarder
  • Fresh Boarder
  • Posts: 16
  • Thank you received: 0
Hi Cornelius,

I have found similar ones in few tests but unable to understand how the cost is calculated. The figures are updated so I wouldn't have the right answer.

The rough calculation goes as follows:-

EMV = (5 Million x 50%) + (-2.5 x 30%)
= (2.5) + (Not sure how the cost is calculated here)

EMV calculation question 2 years 10 months ago #4991

  • Suresh Lingam
  • Suresh Lingam's Avatar
  • Visitor
  • Visitor
Hi,

The calculation is very simple.

Your Question :- If a business has 50% chances to earn $5 million and 30% chances to lose $2.5 million
What is the EMV?

Answer:-

EMV = (50/100 * 5 million) + (30/100 * - 2.5 million)
EMV = 2500000 + (-750000)
EMV = 1750000

If you see I have take -2.5 million is the second part of the formula, because its a loss

I hope this will clear your doubt.
  • Page:
  • 1
Moderators: Yolanda MabutasAhmed AminScott GillardMary Kathrine PaduaERIC BARTLETTGail FreedmanKevin NasonSteven Mudrinich, PMPMark Wuenscher, PMPJohn WolvertonTracy Shagnea, PMPJada Garrett

OSP INTERNATIONAL LLC
OSP INTERNATIONAL LLC
Training for Project Management Professional (PMP)®, PMI Agile Certified Practitioner (PMI-ACP)®, and Certified Associate in Project Management (CAPM)®

Boost Your PMP Exam Prep in Only Six Hours! Join the Live PMP Coaching Class on Dec 02/03 for just $79. Learn More...
The PMP Exam is Changing in 2018
Simona and Cornelius
Free Interview - Listen Now

This interview with Simona Fallavollita (LinkedIn Profile) was recorded at the magnificient Project Management Institute (PMI)® Global Conference 2017 in Chicago, Illinois. We discuss the how, what, why and when of the changes that are coming to the PMP exam.

Thank you!
Cornelius Fichtner, PMP, CSM