Expected Value for a Magazine Sweepstakes Reader's Digests ran a sweepstakes in which prizes were listed with the chances of winning: $1,000,000 (1 chance in 90,000,000), $100,000 (1 chance in 110,000,000), $25,000 (1 chance in 110,000,000), $5,000 (1 chance in 36,667,000), and $2,500 (1 chance in 27,500,000).
a. Assuming that there is no cost of entering the sweepstakes, find the expected value of the amount won for one entry.
b. Find the expected value if the cost of entering this sweepstakes is the cost of a postage stamp. Is it worth entering the contest?© BrainMass Inc. brainmass.com June 3, 2020, 9:52 pm ad1c9bdddf
This solution calculates the expected of entering the Reader's Digest sweepstakes assuming a) entry is free and b) entry cost is the price of a postage stamp.