A math club is researching a golf tournament fund-raiser. It will cost $1,000 to host the tournament. If it rains, the club will lose the investment. If it is sunny, it is expected that the club will collect $4,500 from the participants. If the chance of rain is 20%, what is the expected value for the tournament?
A)–$800
B)–$200
C)$2600
D)$3400

Question

A math club is researching a golf tournament fund-raiser. It will cost $1,000 to host the tournament. If it rains, the club will lose the investment. If it is sunny, it is expected that the club will collect $4,500 from the participants. If the chance of rain is 20%, what is the expected value for the tournament?
A)–$800
B)–$200
C)$2600
D)$3400

anonymous · Answer

I think you find expected value by multiplying the probability of each outcome by the value of that outcome. So in the case that it rains, which is 20%, you will gain -$1000. In the 80% case that it is sunny, you gain a profit of 3,500(4,500-1000). The sum would then be (-1000*0.2)+(3500*0.8)=2600 so C