Expected Return (Scenarios) Calculator

This expected return calculator blends best, base and worst-case scenarios, weighting each outcome by its probability to show the average return you can expect.

Probability of scenario 1 %

Return in scenario 1 %

Probability of scenario 2 %

Return in scenario 2 %

Probability of scenario 3 %

Return in scenario 3 %

Expected return —

Total probability —

Scenario 1 contribution —

We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.

What it does

The Expected Return (Scenarios) Calculator blends several possible outcomes into a single expected return. You give each scenario a probability and the return it would produce, and the tool weights the returns by their likelihood to show what you can reasonably expect on average.

Data sources & parameters

This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.

The formula

expected_return = (p1 × r1 + p2 × r2 + p3 × r3) ÷ 100, where p is each probability and r each return

How it works

Each scenario's return is multiplied by its probability, and the results are added together to give the probability-weighted expected return. The tool also checks that your probabilities sum to 100 percent and shows how much each scenario contributes to the total.

Where it is used

Turning an optimistic, base and pessimistic view into one number
Comparing investments with different risk and reward profiles
Checking that scenario probabilities add up to a valid 100 percent

Worked example

An investor sees a 30% chance of a 15% gain, a 50% chance of an 8% gain and a 20% chance of a 5% loss. The probability-weighted expected return works out to …, with the probabilities summing to ….

What the expected return calculator does

The expected return calculator lets you describe several plausible outcomes for an investment, attach a probability to each, and combine them into one probability-weighted expected return. That figure is your best single estimate of the return, taking into account how good each outcome is and how likely it is.

A share might do well, muddle along, or disappoint; a project might hit its target, fall short, or fail. Laying out the range of possibilities and weighting them gives a more balanced view than a single hopeful or fearful number.

How expected return works

Expected return is a weighted average. Each scenario contributes its return in proportion to its probability, so a scenario you think very likely pulls the average toward its return, while a long shot barely moves it.

You multiply each scenario's return by its probability, sum those products, and divide by 100 because the probabilities are percentages. Three scenarios with returns of 15, 8 and minus 5 percent, weighted 30, 50 and 20 percent, give contributions of 4.5, 4.0 and minus 1.0, which add to an expected return of 7.5 percent.

The method makes you state how probable each outcome is and how good or bad it would be.

The inputs

For each of the three scenarios you supply a probability and a return, both as percentages. The three probabilities should add up to 100 percent, because together they cover every outcome you consider realistic, and the tool displays the total so you can confirm it. A good outcome is a positive return and a loss is a negative one, with no restriction on the values, so you can model a wide upside and a painful downside side by side.

Deciding that the bad case is a 20 percent chance and not a 5 percent chance changes the expected return and your sense of the risk you are taking.

How to use the calculator

Enter the probability and return for scenario 1, typically your optimistic or upside case.
Enter the probability and return for scenario 2, usually your base or most-likely case.
Enter the probability and return for scenario 3, often your pessimistic or downside case.

The calculator shows the expected return, the total of your probabilities, and how much the first scenario contributes. If the total is not 100 percent, adjust your scenarios until it is.

Raise the probability of the downside and watch the expected return fall. Widen the gap between the best and worst cases and see how little the expected return moves even as the risk grows.

Reading the result

An expected return of 7.5 percent means that if the same situation played out many times, the average return would settle near that figure. In any single instance you land on one scenario: the 15 percent gain, the modest 8 percent, or the 5 percent loss.

Two investments can share the same expected return while one clusters its outcomes tightly around the average and the other swings between a large gain and a large loss. The expected return alone cannot tell them apart, so read it alongside the spread of the scenarios.

Expected return and risk

A wide gap between your best and worst cases signals high risk, even if the expected return looks attractive; a narrow gap signals a steadier investment. If two choices have similar expected returns, prefer the one with less extreme scenarios unless you want and can tolerate the volatility. If one has a higher expected return but a far worse downside, ask whether the extra reward justifies the risk of that bad case occurring.

Common mistakes

Probabilities that do not sum to 100. The weighted average is then wrong, so check the total the tool displays.
Giving the optimistic case too high a probability. Let the downside carry realistic weight.
Treating the average as a forecast. Only one scenario will happen.

This article is general information only and is not financial advice.

About This Expected Return Calculator

Use this expected return calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.

Frequently asked questions

How does the expected return calculator work?

You enter three scenarios, each with a probability and the return it would deliver. The calculator multiplies each return by its probability, adds the three results together and divides by 100 to give the probability-weighted expected return, the average outcome you would expect if the situation repeated many times.

Do the probabilities have to add up to 100 percent?

Yes, for the expected return to be meaningful your three probabilities should sum to 100 percent. The tool shows the total so you can check it. If the probabilities add to more or less than 100, the weighted average is distorted and the expected return will be too high or too low.

What is a probability-weighted expected return?

It is the average return across all possible outcomes, with each outcome counted in proportion to how likely it is. A likely, moderate result influences the figure more than an unlikely extreme one. It is your best single estimate of the return, not an outcome that will necessarily happen.

Can I use negative returns?

Yes. A pessimistic or downside scenario usually has a negative return, representing a loss. Enter it as a negative number, such as minus five, and the calculator weights it like any other scenario, pulling the expected return down in proportion to its probability.

Is the expected return what I will actually earn?

No. The expected return is a statistical average, not a prediction of a single year. In reality only one scenario occurs, and it may be better or worse than the average. The expected return is most useful for comparing choices and weighing risk against reward, not for forecasting an exact result.

Is my data kept private?

Yes. The calculation runs entirely in your browser. Nothing you enter is uploaded, stored, or shared with anyone.

About the author

Written and reviewed by

Taha Kheirandish

Economics student and independent researcher

Taha Kheirandish reads tax codes the way other people read maps — to find out where a system actually leads, not where it claims to go.

He is an economics student, and his work here is comparative by design. A pension deferral bonus in Quebec, a commuting allowance in Germany, a rent-increase ceiling in the Netherlands: each is a decision a government made about how money should move, and each reads differently once you set it beside eight others. He builds and checks these calculators across nine markets from primary sources — the regulation rather than a summary of it, the ministry’s own circular rather than a news item quoting it.

That is the editorial standard of the site as well as his habit. Every rate, threshold and bracket here carries the document it was read from and the date it takes effect, and gets re-checked when the law moves rather than when someone happens to notice.

He is a researcher, not a licensed adviser, and nothing on this site is personal financial advice. It is arithmetic done carefully with its sources shown — so that you can check it, and take it to someone who is.

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