Question

A high school spends approximately $9,000 hosting a football games (e.G. The hourly pay for staff, the electricity, water usage, etc.). The school usually collects $15,000 in ticket sales and vending if it doesn't rain. If it rains during the game the school only collects about $5,000. During any day during football season there is about a 12% chance of rain. What is the expected net income for the school for a football game?

Answer 1

$4800

Explanation:

The expected net income is the probability when rains multiplied by net income (profit) summed with the probability of not raining with that days net income multiplied.

First, Chance of rain = 12% = 12/100 = 0.12

Profit/Loss = Income - Cost

Income is 5000

Cost = 9000

So,

Loss = 5000 - 9000 = 4000

Or, Net Income (profit) = - 4000

Now, Change of not raining = 100 - 12 = 88% = 88/100 = 0.88

Profit = Income - Cost

Income = 15,000

Cost = 9000

Net Income (profit) = 15000 - 9000 = 6000

So, we can write the expected net income as:

Expected NI = (0.12)(-4000) + (0.88)(6000) = $4800