A charity organization hosts a raffle drawing at a fund raising event. The organization sells 2500 tickets at a price of $8 each. Winning tickets are randomly selected, with 30 prizes of $100, 10 prizes of $500, and 1 grand prize of $8000.

-$1.6

-$1.6

Step-by-step explanation:

Complete Question:

A charity organization hosts a raffle drawing at a fund raising event. The organization sells 2500 tickets at a price of $8 each. Winning tickets are randomly selected, with 30 prizes of $100, 10 prizes of $500, and 1 grand prize of $8000. Find the expected winnings for a person buying 1 ticket.

Solution:

The expected value is the probability of an event multiplied by its earnings. IF there are more than 1 event, the expected value is sum of all those products.

So,

The probability of winning 1st prize is 1/2500

Probability of 10 prize = 10/2500

Probability of 30 prize = 30/2500

Value of 1st prize 8000

Value of 10 prize = 500

Value of 30 prize = 100

Now, expected value would be:

8000 (1/2500) + 500 (10/2500) + 100 (30/2500) = $6.4

Since buying ticket costs 8, the expected value would be 6.4 - 8 = - $1.6