Question

A company offers a raffle whose grand prize is a $45,000 new car. Additional prizes are a $900 television and a $400 computer. Tickets cost $18 each. Ticket income over the cost of the prizes will be donated to charity. If 3,000 tickets are sold, what is the expected gain or loss (in dollars) of each ticket

Answer 1

Answer:

The expected loss in dollars of each ticket is -$3.5

Explanation:

The computation of the expected gain or loss in dollars of each ticket is shown below:

The probability of winning each of them would be

= 1 ÷ 3,000

Now the expected value is

= $45,000 × (1 ÷ 3000) + $900 × (1 ÷ 3000) + $600 × (1 ÷ 3000)

= 15 + 0.3 + 0.2

= 15.5

Now the cost of the ticket is $18

So, the loss would be

= $18 - 15.5

= -$3.5