Answer:
D) $41,562.50
Explanation:
You can narrow your choics to A or D based on your knowledge that expected value is a weighted average of the possible outcomes. The expected value cannot be higher than the highest possible outcome, nor can it be lower than the lowest.
The probability of two wins is ...
0.25·0.35 = 0.0875
so the expected value of that outcome is
$100,000·0.0875 = $8,750
__
The probability of one win is the sum of the probabilities of a win in the first race followed by a loss, and a loss in the first race followed by a win. The expected value of that outcome is ...
(0.25·0.65 +0.75·0.35)·$60,000 = $25,500
__
The probability of two losses is ...
0.75·0.65 = 0.4875
Though this is the most probable outcome, it is nearly the same as the probability of one win. The expected value of two losses is ...
$15,000·0.4875 = $7,312.50
The expected value of all the outcomes is the sum of these, ...
$8750 +25500 +7312.50 = $41,562.50 . . . . . . matches selection D