Question

You have been entered in a free game where you try to guess the roll of a six-sided die. you will win $50.00 if you guess right. what is your expected payoff value? round to the nearest cent.

Answer 1

in calculating an expected payoff value, we need to compare botht he cost of investment and the projected  earning that we got from that investmet.

In this case the cost of investment is 0 because it's a free game.

Therefore, your expected payoff value would be:

1/6 (percentage of guessing the number correctly) x  $50.00

= $ 8 and 33 cents.