The expected value of tournament is $2600.
According to the statement
we have given that the tournament will cost $1000 and if it is sunny, it is expected that the club will collect $4,500 from the participants. And we have to find the expected value of a tournament.
So, we know that the
Cost of hosting the tournament : $1,000
If it rains, the club will lose the investment: $ -1,000
If it is sunny, the club will collect $4,500 ;
From all this the profit they will get
profit: 4,500 - 1000 = 3,500
And
There is a chance of 20% then
The club will loss the investment is
-1000*20 = -200
And
Effect on their profit if there is a rain then
3500*80 = 2800
then
The expected value of tournament is 2800-200=2600.
So,The expected value of tournament is $2600.
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