Question

Pepsi and Mountain Dew products sponsored a contest giving away a Lamborghini sports car worth $215,000. The probability of winning from a single bottle purchase was 0.0000084. What is the expected payoff value given that the payoff is $0 from a loss

Answer 1

1.806

Step-by-step explanation:

The computation of expected payoff value is shown below:

= Worth of sports car × probability of winning from a single bottle purchase + payoff from a loss × (1 - probability of winning from a single bottle purchase)

= $215,000 × 0.0000084 + 0 × (1 - 0.0000084)

= 1.806 + 0

= 1.806

We simply applied the above formula to determine the expected payoff value