Question

One thousand raffle tickets are sold for $1.00 each. One grand prize of $200 and two consolation prizes of $50 each will be awarded. Jeremy purchases one ticket. Find his expected value. Show your work for full credit.

Answer 1

you have 1 chance in 1000 to get the grand prize

Answer 2

so that is 0.001

Answer 3

you take that and mutiply by 200 to get 20 cents

Answer 4

you have 1 chance out of 500 to get the $50 prizes

Answer 5

which is 0.002

Answer 6

you mutiply that by 50 to get 10 cents

Answer 7

you add the 10 cents to the 20 cents to get 30 cents

Answer 8

so you are expected to earn back 30 cents for every dollar spent