PMP Question 211

[admin]

Management team wants to decide whether to pick up the project or not. Team decided to check the Expected Monetary Value of the project. A project has a 40% chance of $100,000 profit and a 60% of US $100,000 loss. The Expected Monetary Value for the project is:

a. $60,000 loss
b. $40,000 profit
c. $20,000 loss
d. $20,000 profit

[admin]

Correct answer is C.

Expected Monitory Value (EMV) is computed by EMV = Probability × Impact.

EMV = 0.4 × $100,000 = $40,000 – 0.6 × $100,000 = -$20,000

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