A group holds a raffle to raise money. They sell 100 raffle tickets for $5 each. There is one grand prize worth $100, three second place prizes worth $25 each and 5 3rd place prizes worth $10 each. Find the expected value associated with the purchase of one ticket.
What you need to do in order to find the expected value is multiplying each value by its probability, and then totalling. Thus prob($100) = 0.01 prob($25) = 0.03 prob($10) = 0.05 So Expected value = $(100*0.01 + 25*0.03 + 10*0.05) - $5 cost of ticket ............................ = $2.25 - $5 so the expected LOSS is $2.75 I hope this can help you
