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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.

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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

[tex]x=100\ with\ Probability\ \frac{40}{5000}[/tex]

[tex]x=1000\ with\ Probability\ \frac{10}{5000}[/tex]

Expected value is given by

[tex]E(x)=100\times \frac{40}{5000}+1000\times \frac{10}{5000}[/tex]

[tex]E(x)=0.8+2=2.8[/tex]

and Expected return is given by

[tex]=100\times \frac{40}{5000}+1000\times \frac{10}{5000}-5[/tex]

[tex]=2.8-5=$ -2.2[/tex]

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