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Expected Value: Lottery

A magazine ran a sweepstakes in which prices were (see list below). listed along with the chance of winning. values 1 chance out of
$1,000,000 ; 80,000,000
$100,000 ; 120,000,000
$25,000 ; 120,000,000
$5,000 ; 36,667,000
$2,500 ; 26,500,000

(A) Assuming that there is no cost to enter the .sweepstakes, find the expected value of the amount won for one entry. Round to the nearest tenth.

(B) Find the expected value if the cost of entering the sweepstake and the cost of the postage stamp is 3 cents.
Please show me how you get these answers step-by-step so I can understand. If possible attach an excel sheet so that I may learn to find the future probability questions.

Solution Preview

(a) Find the expected value of the amount won for one entry.

Answer: 1 chance in 80,000,000 is basically another way of saying with probability = 1/80,000,000 corresponding to the prize $1,000,000. The ...

Solution Summary

The expected value of lottery is examined.

$2.19