Question

One thousand Charity raffle tickets are sold for $1 each. Winning tickets will be drawn in order,1st,2nd,3rd. First prize is $500. Second prize is $300. Third prize is $150. Tickets are replaced after each drawing so the probability of being draw for each prize is 1/1000. What is the expected value? I am stuck on this question and need help

Answer 1

-$0.05

Step-by-step explanation:

The expected value can be calculated as the sum of each possible prize multiplied by its probability. You will buy a ticket for $1 and there is a probability of 1/1000 to win the $500, a probability of 1/1000 to win $300, and a probability of 1/1000 to win $150, then the expected alue is

`\begin{gathered} E=-1+500((1)/(1000))+300((1)/(1000))+150((1)/(1000)) \\ E=-1+0.5+0.3+0.15 \\ E=-0.05 \end{gathered}`

Therefore, the expected value is -$0.05.