Question

Five thousand raffle tickets are sold for $5 each. 50 winnings numbers will be chosen, 40 of which will win $100 each and 10 of which will win $1000 each. find the expected value (expected winnings) per $5 ticket sold.

Answer 1

Explanation:

Given

there are 50 winning number out of which 40 get $ 100 each and 10 wins $ 1000 .

let x denotes the winning from a randomly selected ticket

`x=100\ with\ Probability\ (40)/(5000)`

`x=1000\ with\ Probability\ (10)/(5000)`

Expected value is given by

`E(x)=100* (40)/(5000)+1000* (10)/(5000)`

`E(x)=0.8+2=2.8`

and Expected return is given by

`=100* (40)/(5000)+1000* (10)/(5000)-5`

`=2.8-5=$ -2.2`