Use the Calculator with Case to determine the expected value of your case based on its value and the probability of winning.
Expected Value Calculation Formula
The following formula is used to calculate the expected value of a case:
Expected Value = Case Value * (Probability of Winning / 100) - Case Costs
Variables:
- Expected Value is the anticipated monetary outcome of the case ($)
- Case Value is the total value of the case ($)
- Probability of Winning is the likelihood of a favorable outcome (%)
- Case Costs are the expenses associated with pursuing the case ($)
To calculate the expected value, multiply the case value by the probability of winning, then subtract any associated costs.
What is Expected Value Calculation?
Expected value calculation is a statistical method used to determine the average outcome of a case based on its potential value and the likelihood of success. This calculation helps individuals and businesses make informed decisions regarding legal actions and investments.
How to Calculate Expected Value?
The following steps outline how to calculate the expected value using the given formula:
- Determine the total value of the case.
- Assess the probability of winning the case.
- Identify any costs associated with pursuing the case.
- Use the formula: Expected Value = Case Value * (Probability of Winning / 100) – Case Costs.
- Calculate the expected value by plugging in the values.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Case Value = $100,000
Probability of Winning = 70%
Case Costs = $10,000
FAQ
1. What is expected value?
Expected value is a calculated average outcome of a scenario, taking into account all possible results and their probabilities.
2. How is expected value used in legal cases?
Expected value helps individuals assess the potential financial outcome of pursuing a legal case, allowing for better decision-making.
3. Can expected value be negative?
Yes, if the costs outweigh the potential gains, the expected value can be negative, indicating a loss.
4. How often should I use the expected value calculator?
It’s beneficial to use the expected value calculator whenever considering a new case or investment to evaluate potential outcomes.
5. Is the calculator accurate?
The calculator provides an estimate based on the inputs provided. For precise figures, consult with a legal professional.