Five thousand tickets are sold at $1 each for a charity raffle. Tickets are to be drawn at random and monetary prizes awarded as follows: 1 prize of $ 500 500, 3 prizes of $ 200 200, 5 prizes of $ 10 10, and 20 prizes of $5. What is the expected value of this raffle if you buy 1 ticket?

The expected value of this raffle per ticket is $ 0.25.

Given that five thousand tickets are sold at $ 1 each for a charity raffle, and tickets are to be drawn at random and monetary prizes awarded as follows: 1 prize of $ 500, 3 prizes of $ 200, 5 prizes of $ 10, and 20 prizes of $ 5, to determine what is the expected value of this raffle if you buy 1 ticket, the following calculation must be performed:

Therefore, the expected value of this raffle per ticket is $ 0.25.

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-$0.75

Step-by-step explanation:

For calculation of expected value first we need to find out the probability distribution for this raffle which is shown below:-

Amount                  Probability

500 - 1 = $499       1 ÷ 5,000

200 - 1 = $199        3 ÷ 5,000

10 - 1 = $9                5 ÷ 5,000

5 - 1 = $4                   20 ÷ 5,000

-$1                             5,000 - 29 ÷ 5,000 = 4,971 ÷ 5,000

Now, the expected value of raffle will be

= 0.0998  + 0.1194  + 0.009  + 0.016  - 0.9942

= -$0.75

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