Question

Five thousand raffle tickets are sold for $5 each. 50 winnings numbers will be chosen, 40 of which will win $100 each and 10 of which will win $1000 each. find the expected value (expected winnings) per $5 ticket sold.

Answer 1

Answer:

Step-by-step explanation:

Given

there are 50 winning number out of which 40 get $ 100 each and 10 wins $ 1000 .

let x denotes the winning from a randomly selected ticket

$x=100\ with\ Probability\ \frac{40}{5000}$

$x=1000\ with\ Probability\ \frac{10}{5000}$

Expected value is given by

$E(x)=100\times \frac{40}{5000}+1000\times \frac{10}{5000}$

$E(x)=0.8+2=2.8$

and Expected return is given by

$=100\times \frac{40}{5000}+1000\times \frac{10}{5000}-5$

$=2.8-5= -2.2$