Question

You buy $10 raffle ticket for a new car valued at $15,000. 2000 tickets are sold. What is expected value of your gain?

Answer 1

The expected value of gain is $5000

Using the parameters given for our Calculation;

• Number of tickets = 2000
• price per ticket = $10
• Value of car = $15000

The total value of tickets purchsed:

• 2000 × $10 = $20000

The expected value of gain = Cost of tickets - Value of car

Expected gain = $20000 - $15000 = $5000

The expected value of gain is $5000

Answer 2

So your gains are given by:

`\text{gains}=\text{price of the car}-\text{price of the ticket}`

Then we get:

`\text{gains}=\text{\$}15000-\text{\$}10=\text{\$}14990`

And that's the value of your gain.