A lottery ticket costs you $3. You look at the probabilities on the back side of the lottery ticket. You see that you have a 20% chance of winning $1, a 10% chance of winning $5, a 5% chance of winning $20, and a 1% chance of winning $100. What is the expected value of this lottery ticket ... don't forget to subtract what you paid for it?

Question

A lottery ticket costs you $3.  You look at the probabilities on the back side of the lottery ticket.  You see that you have a 20% chance of winning $1, a 10% chance of winning $5, a 5% chance of winning $20, and a 1% chance of winning $100.  What is the expected value of this lottery ticket ... don't forget to subtract what you paid for it?

welshfella · Answer

i think its (1* 0.2 + 5 * 0.1 + 20 * 0.05 + 100 * 0.01)   -  3