What should the jackpot be before the expected payoff

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Tennessee just instituted a state lottery. The initial jackpot is $100,000.00. If the first week yields no winners, the next weeks jackpot goes up, depending on the number of previously players who placed the $1.00 lottery bets .The probability of winning is 1 in 1 million(1-10-6) What must the jackpot be before the expected payoff is worth your $1.00 bet. Assume that the state takes 60% of the jackpot in taxes, that no one else is a winner, and that you are risk -neutral (i.e. you value the lottery at its expected value).

Reference no: EM1358186

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