Question

Annie is participating in a winner-take-all World Series of Poker tournament that costs 101010 thousand dollars to enter. The prize for winning the tournament is 500500500 thousand dollars. Annie estimates that there is a 0.5 \%0.5%0, point, 5, percent chance that she will win the tournament. Find the expected value of entering the tournament for Annie.

Answer 1

The expected value of entering the tournament for Annie is -15,152,520 thousand dollars.

Step-by-step explanation:

To find the expected value of entering the tournament for Annie, we need to multiply the probability of winning by the prize for winning and subtract the cost of entering the tournament.

The probability of winning is 0.5% (or 0.005) and the prize for winning is 500,500,500 thousand dollars. The cost of entering the tournament is 10,101,010 thousand dollars.

Expected value = (0.005 * 500,500,500) - 10,101,010 = -5,051,510 - 10,101,010 = -15,152,520 thousand dollars.

Answer 2

Answer: −7.5 thousand dollars

Step-by-step explanation: Khan Academy