Question

There is a raffle for a $950 prize. Out of 125 tickets, each costing $18, one ticket will win the prize, and the rest will win nothing. If you buy a ticket, what is the expected profit

Answer 1

The expected value formula is

$E=\Sigma x\cdot P(x)$

We know that there are 125 tickets, so the probability of the ticket is

$P(x)=\frac{1}{125}$

Then, we find the expected value

$E=950\cdot\frac{1}{125}=7.60$

Hence, the expected value is $7.60.