Question

The student council is hosting a drawing to raise money for scholarships. They are selling tickets for $8 each and will sell 900 tickets. There is one $1,000 grand prize, two $200 second prizes, and thirteen $40 third prizes. You just bought a ticket. Find the expected value for your profit. Round to the nearest cent

Answer 1

Explanation:

The probability of winning the grand prize is 1/900, and the profit would be $1000 - $8 = $992.

The probability of winning a second prize is 2/900, and the profit would be $200 - $8 = $192.

The probability of winning a third prize is 13/900, and the profit would be $40 - $8 = $32.

The probability of winning nothing is 884/900, and the profit would be -$8.

The expected value is the sum of the product of each outcome and its probability:

Expected value = (1/900)($992) + (2/900)($192) + (13/900)($32) + (884/900)(-$8)

= $1.10

Therefore, the expected value for your profit is $1.10.