Your school’s baseball team sells 1250 raffle tickets at $4 each. The grand prize is a $3000 boat. The second prize is a $450 grill. There are also ten $25 gift certificates. Calculate the expected value of the winnings for a single-ticket purchase. Show the work that leads to your answer.

The expected value of the winnings for a single-ticket purchase is -$1.0016.

Step-by-step explanation:

The total number of tickets sold is, N = 1250.

Cost of one ticket is, $4.

Let X = amount of prize.

The prize distribution is as follows:

1 Grand price = $3000

1 Second prize = $450

10 Third prize = $25

The expected value X can be computed using the formula:

Compute the probability distribution of X as follows:

     Prize        Amount (X)         P (X)                    x · P (X)

1 Grand prize    $3000            

1 Second prize  $450                

10 Third prize      $25                  

No prize             -$4        

TOTAL                              1.0000                            -1.0016

Thus, the expected value of the winnings for a single-ticket purchase is -$1.0016.

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step-by-step explanation: