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Solution: Calculate the expected value of a business scenario

Solution: Calculate the expected value of a business scenario - Microsoft Excel Tutorial

From the course: Learning Excel: Data Analysis

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Solution: Calculate the expected value of a business scenario

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(upbeat music) - [Instructor] In the previous movie, I described a set of four scenarios, assigning probabilities and values of that scenario to each one. And our goal is to calculate the expected value of each of the scenarios and then also for the entire project. So I'll start in cell D2, and the expected value of a particular scenario is the probability multiplied by the value. So in D2, I'll type equal and I have B2 times C2 and Enter. So we have 18% of 30,000, which is $5,400. And now I can copy that formula down so that I have the same calculation for the other scenarios. So with cell D2 selected, I will drag the fill handle down, cover the other cells, and I can see that I have 5% or 1/20 of 60,000 of 3000, 1/3 of 5,000 of 1650, and 44% of 10,000 is 4,400. Note that the values for scenarios three and four are negative, that's why they're in parentheses. To find the total expected value, we want to add up all of the expected values from the individual scenarios. So I'll click…

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