It should be noted that the expected return on each ticket is $3 and the expected profit is also $3.
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Calculating the expected value</h3>
From the information given, it was stated that they are selling tickets for $6 each and will sell 900 tickets and that there is one $1,000 grand prize, three $500 second prizes, and twelve $10 third prizes.
Therefore, the expected value will be calculated thus:
E = (1/900 × 1000) + (3/900 × 500) + (12/900 × 10)
E = 2.91 = $3
The expected return on each ticket is $3.
Since the cost of the ticket is $6, the expected profit per ticket will be:
= $6 - $3 = $3
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