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10 April, 23:30

A local PTA runs a fundraiser, selling lottery tickets for $5, offering 1 first prize of $100 and 5 second prizes worth $20 each. They sell 100 tickets. What is the expected value of each ticket? - $3 $3 - $2.7 $2.7

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  1. 11 April, 00:35
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    The expected value is the expected income less the expected cost.

    The expected cost is a certain; it is $5.

    The expected income is the probability of each possibility times its reward.

    => First prize: probability * prize = (1 / 100) * $ 100 = $1

    => Second prize: probability * prize = (5 / 100) * $20 = $1

    Expected value = $1 + $1 - $5

    Expected value = - $3

    Answer: - $ 3
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