Expected value of lottery ticket

Reference no: EM1390661

You're considering paying $5 to buy a ticket in a local lottery. You were told that 10,000 tickets will be sold. There are 5 prizes. The first prize is $5,000, the second is $1,000, the third is $500, the fourth is $100 and the last prize is $10.

Compute the expected value from the payoff.

a) $0.661

b) $1.20

c) $5.00

Reference no: EM1390661

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