{"id":40165,"date":"2025-10-14T13:55:47","date_gmt":"2025-10-14T13:55:47","guid":{"rendered":"https:\/\/certifeka-edu.com\/programs\/finance-for-strategic-managers-accounting-professional-certificate-2\/lessons\/lesson-2-emv-2\/"},"modified":"2025-10-14T13:55:47","modified_gmt":"2025-10-14T13:55:47","slug":"lesson-2-emv-2","status":"publish","type":"lesson","link":"https:\/\/certifeka-edu.com\/ar\/programs\/sample-course\/lessons\/lesson-2-emv-2\/","title":{"rendered":"Lesson 2: EMV"},"content":{"rendered":"

\"\"\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n

Lesson 2 :Understanding Business Risk
\n<\/h2>\n

EMV Definition
\n<\/h3>\n

The expected monetary value is how much money you can expect to make from a certain decision.<\/h5>\n
It helps to quantify and compare risks in many aspects of the project.<\/h5>\n
The formula used to calculate the EMV of an outcome is simple (Insert the image of the equation).<\/h5>\n
You will need to account for the outcome’s probability (P) and impact (I) in this formula.<\/h5>\n
The probability is usually a fraction or percentage, while the impact is typically a positive or negative monetary value.<\/h5>\n
The EMV formula in its simplest form is a 3 steps process:<\/h5>\n
\n\n\t\t\t\t\t Step1:
\n\t\t\t<\/path><\/svg>
\n\t\t\t<\/path><\/svg>
\n\t\t\t\t\t\t<\/summary>\n
Determine the probability (P) an outcome will occur.<\/h5>\n<\/details>\n
\n\n\t\t\t\t\t Step2:
\n\t\t\t<\/path><\/svg>
\n\t\t\t<\/path><\/svg>
\n\t\t\t\t\t\t<\/summary>\n
Determine the monetary value or impact (I) of the outcome.<\/h5>\n<\/details>\n
\n\n\t\t\t\t\t Step3:
\n\t\t\t<\/path><\/svg>
\n\t\t\t<\/path><\/svg>
\n\t\t\t\t\t\t<\/summary>\n
Multiply P x I to calculate the EMV.<\/h5>\n<\/details>\n
Determine the probability (P) an outcome will occur.<\/h5>\n
Determine the monetary value or impact (I) of the outcome.<\/h5>\n
Multiply P x I to calculate the EMV.<\/h5>\n
If a scenario presents multiple potential outcomes,
you need to calculate the EMV for each potential outcome and add them together to get the overall EMV.<\/h5>\n

EMV Case study:
\n<\/h3>\n

Let’s say you are deciding whether or not to purchase a tool that may help your project.<\/h5>\n
The tool costs $10,000 and has a 70% chance of working. If it works, your project will net $15,000.<\/h5>\n
If the tool works…<\/h5>\n
Positive EMV = 70% x $15,000 = $10,500<\/h5>\n
If the tool fails…<\/h5>\n
Negative EMV = 30% x -$10,000 = -$3,000<\/h5>\n
Overall EMV = $10,500 — $3,000 = $7,500<\/h5>\n
Typically, you should assume any option with a positive EMV is worth pursuing.<\/h5>\n
Your project may also require you to choose between multiple options.<\/h5>\n
Calculating and comparing the overall EMVfor each potential scenario’s outcomes will allow you to select the best option.<\/h5>","protected":false},"comment_status":"open","ping_status":"closed","template":"","class_list":["post-40165","lesson","type-lesson","status-publish","hentry"],"yoast_head":"\nLesson 2: EMV - Certifeka-edu<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/certifeka-edu.com\/ar\/programs\/sample-course\/lessons\/lesson-2-emv-2\/\" \/>\n<meta property=\"og:locale\" content=\"ar_AR\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 2: EMV - Certifeka-edu\" \/>\n<meta property=\"og:description\" content=\"Lesson 2 :Understanding Business Risk EMV Definition The expected monetary value is how much money you can expect to make from a certain decision. 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