Answer:
The expected value is $2.1
Step-by-step explanation:
If we have an event with some given outcomes:
x₁, x₂, ..., xₙ
Such that each one of these outcomes has the correspondent probability:
p₁, p₂, ..., pₙ
The expected value is:
EV = p₁*x₁ + ... + pₙ*xₙ
In this case we have a table with the events (the payouts) and the probability for each one, so we have:
x₁ = $0
p₁ = 0.5
x₂ = $2
p₂ = 0.2
x₃ = $4
p₃ = 0.15
x₄ = $6
p₄ = 0.1
x₅ = $10
p₅ = 0.05
Now we can just replace these in the expected value equation, so we get:
EV = $0*0.5 + $2*0.2 + $4*0.15 + $6*0.1 + $10*0.05 = $2.1
