Question

A raffle has a grand prize of a Alaskan cruise valued at $13500 with a second prize of a weekend in San Diego valued at $700. If each ticket costs $4 and 10400 tickets are sold, what are the expected winnings far a ticket buyer?  Express to at least three decimal place accuracy in dollar form (as opposed to cents).

Answer 1

Total number of ticket sold = 10400

cost of each ticket = $ 4

If buyer win grand prize then net winning amount = 13500-4= 13496

with probability 1/10400

If buyer win second prize then net winning amount= 700 - 4 = 696 with probability 1/10400

If buyer lost then he lose $ 4 with probability 10398/10400

The expected winning amount E( X )

E(X) = X * P( X )

E( X ) = 13496*(1/10400) + 696*(1/10400) - 4*(10398/10400)

E( X ) = -2.634

Expected winning = $ ( 2.634)