Question

There is a raffle for a $860 prize. Out of 500 tickets, one ticket will win the prize, and the remaining tickets will win nothing. If you have a ticket, what is the expected payoff?

Answer 1

Given that 1 out of 500 tickets will win, the probability of winning is 1/500

The expected payoff is calculated as follows:

winning probability x prize = 1/500 x 860 = $1.72