Question

Five thousand tickets are sold atâ $1 each for a charity raffle. tickets are to be drawn at random and monetary prizes awarded asâ follows: 1 prize of â$500â, 3 prizes of â$300â, 5 prizes of â$30â, and 20 prizes ofâ $5. what is the expected value of this raffle if you buy 1â ticket?

Answer 1

-$0.67

Explanation:

If you buy one ticket, the possible outcomes are:

100% chance of spending $1 (buying the ticket)

1 in 5,000 chance of winning $500

3 in 5,000 chance of winning $300

5 in 5,000 chance of winning $30

20 in 5,000 chance of winning $5.

The expected value of the raffle is determined by:

`E(X)=-1+(1)/(5,000)*500+(3)/(5,000)*300+(5)/(5,000)*30+(20)/(5,000)*5\\E(X)=-\$0.67`

The expected value of this raffle if you buy 1 ticket is -$0.67.