Answer:
b. $299,574
Explanation:
For calculating the ask price, we first need to compute the present value which is attached in the spreadsheet.
In this question, we use the present value formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Future value = $0
Rate of interest = 7.5%
NPER = 25 years - 1 years = 24 years
PMT = $25,000
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the present value is $278,673.65
Now the ask price is
= $274,574.17 + $25,000
= $299,574.17
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Answer:
The correct answer would be $5
Explanation:
The formula to use is "Expected return to player" which is
E(x) = x.p(x)
where x is the return to player if they win
and p(x) is the probability of winning.
So here,
x = $100 (return to player for winning)
p(x) = 1/50 (probability of winning)
Therefore expected return to player is
E(x) = x.p(x)
= $100 x 1/50
= $100/50
= $2
Cost: $7
Expected return to player is $2.
Therefore Loss (to player) is Cost minus Expected return
= $7 - $2 = $5 <---- expected value for the carnival to gain,
The loss to the player is the carnival's gain. It's $5.
Answer and Explanation:
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