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Expected Cost Calculator

Calculate Expected Cost



Formula

The formula to calculate the expected cost is:

EC=MC×P(x)100

Where:

Example

Let's say the maximum cost (MC) is $10,000 and the probability of cost (P(x)) is 20%. Using the formula:

EC=10000×20100

We get:

EC=10000×0.20=2000

So, the expected cost (EC) is $2,000.

What is Expected Cost?

Expected cost is the anticipated amount of money that will be spent, calculated by multiplying the maximum cost by the probability of the cost occurring. This helps in budgeting and financial planning by providing a more realistic estimate of potential expenses.