Question

At a carnival, there is a raffle with 100 tickets, each costing $7. One ticket will win a $420 prize, and the rest will win nothing. If you buy a ticket, what is the expected profit?

Answer 1

$-6.34

Step-by-step explanation

Let 'X' be the event with the net profit.

The expected value of X is:

`E(X)=P(\text{ winning)}(420-7)+P(\text{ losing})(0-420)`

The probability of winning is the probability of choosing 1 right number out of the 100 numbers of the raffle:

`P(\text{wining)}=(1)/(100)`

The probability of losing is the probability of getting any of the other numbers:

`P(lo\sin g)=1-P(wining)=1-(1)/(100)=(99)/(100)`

The exp