A lottery has a grand prize jackpot worth 80 million dollars. The chance of winning from purchasing a single ticket is 1 in 18900000.

Question

a) What is the expected value of winning from a single ticket in dollars? (Round your answer to the nearest cent)

b)Would it be worth to buy a ticket for 1 dollar? Yes/No

Answer 1

gain (x) probability P(x)

win 79,999,999 1/18,900,000

lose -1 18,899,999/18,900,000

expected value = sum x * P(x)

expected value = 79,999,999 * 1/18,900,000 -1 * 18,899,999/18,900,000 = 4.23 - 0 = 4.23

worth it to buy a dollar ticket