Question

Tickets for a raffle costs $7. There were 640 tickets sold. One ticket will be randomly selected as the winner, and that person wins $ 1600 and also the person is given back the cost of the ticket. For someone who buys a ticket, what is the Expected Value (the mean of the distribution)?

Answer 1

Answer: Expected value is -4.48.

Step-by-step explanation:

Since we have given that

Cost of ticket for a raffle = $7

Number of tickets sold = 640

Amount winner wins = $1600

So, we need to find the expected value.

So, it becomes,

$E[x]=\sum xp(x)\\E[x]=-7\times \dfrac{639}{640}+(1600+7)\times \dfrac{1}{640}\\\\E[x]=\dfrac{-4473+1607}{640}\\\\E[x]=\dfrac{-2866}{640}\\\\E[x]=-4.48$

Hence, Expected value is -4.48.