Question

A raffle has 50 tickets. One ticket will win a $590 prize. The rest will win nothing. If you have a ticket, what is the expected payoff?

Answer 1

$11.8

Explanation:

Probability of winning = 1/50

Probability of not winning = 1 - 1/50 = 49 / 50

Amount won = 590

X : ____ 590 ___ 0

P(X) : __ 1/50 __ 49/50

Expected payoff :

ΣX * p(x)

(590 * 1/50) + (0 * 49/50)

0.02 * 590 + 0

11.8 + 0

= $11.8