expected monetary value

= EMV
In decision making, the sum of the products of the outcomes in monetary terms and the probabilities of these outcomes arising. In decision trees subjective probability estimates are assigned to each possible outcome. In the EMV, the outcomes are expressed in terms of money. Compare expected value.
Example
A manager calculates that a project has three possible monetary outcomes, each of which is assigned a different subjective probability. The EMV can then be calculated as follows:
The figure of 3900 can then be compared with the EMVs of alternative projects as a guide to decision making.

Accounting dictionary. 2014.

Look at other dictionaries:

  • expected monetary value — EMV In decision making, the sum of the products of the outcomes in monetary terms and the probabilities of these outcomes arising. In decision trees subjective probability estimates are assigned to each possible outcome. In the EMV, the outcomes… …   Big dictionary of business and management

  • Expected value of perfect information — In decision theory, the expected value of perfect information (EVPI) is the price that one would be willing to pay in order to gain access to perfect information. [Douglas Hubbard How to Measure Anything: Finding the Value of Intangibles in… …   Wikipedia

  • Expected value of sample information — In decision theory, the expected value of sample information (EVSI) is the price that one would be willing to pay in order to gain access to a sample from the distribution about which the prediction has to be made. For example, if one needs to… …   Wikipedia

  • expected value — EV A statistical measure of central value often used in decision making. It is the sum of the possible outcomes in quantitative terms, such as units of output or sales, weights, or volumes, multiplied by the respective probabilities of these… …   Big dictionary of business and management

  • expected value — EV In decision making, the sum of the products of the outcomes in quantitative terms, such as units of output or sales, weights, or volumes, and the probabilities of these outcomes arising. Compare: expected monetary value …   Accounting dictionary

  • Value network — A value network is a business analysis perspective that describes social and technical resources within and between businesses. The nodes in a value network represent people (or roles). The nodes are connected by interactions that represent… …   Wikipedia

  • Expected shortfall — (ES) is a risk measure, a concept used in finance (and more specifically in the field of financial risk measurement) to evaluate the market risk or credit risk of a portfolio. It is an alternative to value at risk that is more sensitive to the… …   Wikipedia

  • Monetary policy of the Philippines — Monetary policy is the monitoring and control of money supply by a central bank, such as the Federal Reserve Board in the United States of America, and the Bangko Sentral ng Pilipinas in the Philippines. This is used by the government to be able… …   Wikipedia

  • Value of information — (VoI) in decision analysis is the amount a decision maker would be willing to pay for information prior to making a decision. imilar termsVoI is sometimes distinguished into value of perfect information, also called value of clairvoyance (VoC),… …   Wikipedia

  • Value at risk — (VaR) is a maximum tolerable loss that could occur with a given probability within a given period of time. VaR is a widely applied concept to measure and manage many types of risk, although it is most commonly used to measure and manage the… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.