To answer this question, we need to calculate the expected value for this raffle.
• We have that for winning the $660, we have a probability of 1/500.
,• For winning a $160 prize, we have a probability of 15/500.
,• For wining a $70 prize, we have a probability of 20/500.
,• For the rest, (500 - (1+15+20) = 500 - 36 = 464), that is, 464/500 you will expect win nothing.
Then, the expected payoff is given as follows:
[tex]\frac{1}{500}\cdot660+\frac{15}{500}\cdot160+\frac{20}{500}\cdot70+\frac{464}{500}\cdot0=8.92[/tex]Then, the expected payoff is $8.92.
