Question 729471: Can you please help me with this? Thank you so much for your time!
Tyrone pays $5 for a lottery ticket. There is a .1% chance that he will win $200, a 1% chance that he will win $50, and a 5.2% chance that he will win $25 (Otherwise he wins nothing). Find his expected payoff. How much can he expect to win or lose on average? Don't forget to include the price of the ticket!
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Tyrone pays $5 for a lottery ticket. There is a .1% chance that he will win $200, a 1% chance that he will win $50, and a 5.2% chance that he will win $25 (Otherwise he wins nothing). Find his expected payoff. How much can he expect to win or lose on average? Don't forget to include the price of the ticket!
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Random Winning values: ......195......45.....20.........-5
Probabilities::::::::: .......1/100...1/100..5.2/100...92.8/100
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Expected winnings = [195 + 45 + 104 -464]/100 = -120/100 = -$1.20
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Cheers,
Stan H.
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