Question

The PTA is holding a raffle. The prize is a camera worth $55000. Each raffle ticket costs $2. 29 tickets are sold and a winner is drawn at random. Find the expected value of the purchase of a ticket.

Answer 1

Answer: $1,894.55

Explanation:

The expected value is the sum of the different outcomes multiplied by the probability that that particular outcome comes true.

Probability of winning = 1/29 tickets

Probability of losing = 28/29 tickets

Gain if you win

= Price - cost of tickets

= 55,000 - 2

= $54,998

Loss if lose:

= -$2

Expected value = (Probability of winning * gain if you win) + (Prob. of losing * loss)

= (1/29 * 54,998) + (28/29 * -2)

= $1,894.55