Question 1125529: A charitable organization is selling raffle tickets for $4 . The first prize a computer valued at $2780 second prize is a set of cookware valued at $940. The remaining prizes are 30 third prize gift certificates each valued at $35.suppose 3500 tickets were sold and you bought 1 ticket what is the expected value of your gain or loss? Express your answer in dollars and cent's rounded to the nearest penny I.e. 2 decimal places
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! 3500 tickets are sold.
each ticket costs $4.00.
1 ticket will get you a prize worth 2780.
1 ticket will get you a prize worth 940.
30 tickets will get you a gift certificate worth 35 each.
the probability of having to pay for a ticket is 1.
the probability of getting the ticket worth 2700 is 1/3500.
the probability of getting the ticket worth 940 is 1/3500.
the probability of getting one of the tickets worth 35 is 30/3500.
your expected value is 1 * -4 + 1/3500 * 2780 + 1/3500 * 940 + 30/3500 * 35.
that gets you an expected value of -2.637142857.
you gave them 4 dollars and your expected prize money was 1.362857143.
your net value was -4 + 1.362857143 = -2.637142857.
what does this mean?
assume you bought all 3500 tickets.
you would have paid 3500 * 4 = 14,000 dollars.
you would get back 2780 + 940 + 30 * 35 = 4,770 dollars.
you would have netted 4,770 - 14,000 = -9230 dollars.
divide that by 3500 tickets and the average net would be -2.637142857 dollars.
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