Question

Out of 250 tickets in a raffle, one ticket will win a $430 prize, one ticket will win a $290 prize, one ticket will win a $190 prize, and one ticket will win a $130 prize. The rest will win nothing. If you have a ticket, what is the expected payoff?

Answer 1

The expected value is given by:

$E(x)=\sum ^{}_{}xP(x)$

In this case we have:

$\begin{gathered} E(x)=430(\frac{1}{250})+290(\frac{1}{250})+190(\frac{1}{250})+130(\frac{1}{250}) \\ =4.16 \end{gathered}$

Therefore the expected payoff is $4.16