Question

In a raffle, one ticket will win a $120 prize, sixteen tickets will win a $30 prize, and the other tickets will win nothing. There are 100 in the raffle. If you have a ticket, what is the expected payoff?

Answer 1

Teshawn, this is the solution to the exercise:

To calculate the expected payoff, we proceed as follows:

• Expected payoff = (1/100 * 120) + (16/100 * 30) + (83/100 * 0)

,

• Expected payoff = 1.2 + 4.8 + 0

,

• Expected payoff = $ 6

This means that any of the 100 tickets has an expected payoff of $ 6, taking into account the $ 120 prize and the sixteen $ 30 prizes