Question

A raffle is being held at a benefit concert. The prizes are awarded as follows: 1 grand prize of $6,200.00, 3 prizes of $940.00, 8 prize of $98.00, and 10 prizes of $25.00. Suppose 17000 raffle tickets are sold, if you buy one ticket for $1.00 then what is your expected value for this raffle?

Answer 1

Expected Value = -$0.41

Explanation:

Expected Value = [$6,200*(1/17000) + $940*(3/17000) + $98*(8/17000) + $25*(10/17000)] - 1

Expected Value = [0.59]-1

Expected Value = -$0.41

Answer 2

Expected value = $-0.41

Explanation:

1 grand prize = $6,200

3 prizes = $940

8 prize = $98

10 prizes = $25

Total raffle tickets = 17000

The value of each ticket is

$6,200*(1/17000) + $940*(3/17000) + $98*(8/17000 + $25*(10/17000)

$0.364 + $0.1658 + $0.0461 + $0.0147

$0.59

The expected value is

E = $0.59 - $1

E = $-0.41

That means you are most likely to lose $0.41 if you buy a raffle ticket for $1.