A raffle is taking place and tickets are being sold for $5. Everyone who enters will have an equal chance of winning and the prizes will be given according to the following payouts: 1st Prize: One first prize winner will receive $500. 2nd Prize: Eight second prize winners will receive $100 each. (a) Find the expected profit for a person who buys 1 raffle ticket, if 300 tickets are sold. (b) Would you choose to buy a raffle ticket? Use your answer from part (a) to explain why or why not.

A raffle is taking place and tickets are being sold for $5. Everyone who enters will have an equal chance of winning and the prizes will be given according to the following payouts: 1st Prize: One first prize winner will receive $500. 2nd Prize: Eight second prize winners will receive $100 each. (a) Find the expected profit for a person who buys 1 raffle ticket, if 300 tickets are sold. (b) Would you choose to buy a raffle ticket? Use your answer from part (a) to explain why or why not.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

The Jefferson High School Band Booster Club has organized a raffle. The prize is a $6,000 car. Two thousand tickets to the raffle are to be sold at $1 apiece. If a person purchases four tickets, what will be the expected value of the tickets?
A raffle is going to be held in which the winner will get $200. If 1000 tickets are to be sold, what is the fact price for a ticket?
A raffle is going to be held in which there is a first prize worth $500, a second worth 50,and two third prizes that are worth $5 each. If 100 tickets are to be sold, what is the fair price for a ticket?
The student council is hosting a drawing to raise money for scholarships. They are selling tickets for $6 each and will sell 700 tickets. There is one $3,000 grand prize, four $400 second prizes, and twelve $40 third prizes. You just bought a ticket. Find the expected value for your profit. ? Round to the nearest cent.
Dash and Lily Corporation wanted to raise funds for the poor. The first prizefor a raffle is P500,000 (with a probability of 0.001) and the second prize is P250,000 (with a probability of 0.003). What is a fair price to pay for a single ticket in this raffle?
Christy Smith wants to open a sports bar. If she qualifies for a $250,225 simple discount note at 9% for 280 days, what are her proceeds? (Round your answer to the nearest cent.)
A morning radio show offered the following four prizes as alternative prizes for one of its competitions. Which prize is the most valuable if your discount rate is 6%? (Show working to justify your answer.) (a) $5,000 per year, forever, with the first amount paid after 1 year. (b) $12,000 per year for eight years, with the first amount paid today. (c) $20,000 today and $80,000 six years from now. (d) $15,000 per year for ten years, with the first amount paid at year 5. (e) State the most valuable prize. (Give a reason for your choice.)
Mrs. Tannenbaum is going to sell Christmas tree lights for $40 a box. The lights cost Mrs. Tannenbaum $10 a box and any unsold lights can be returned for a full refund. She is planning to rent a booth at the upcoming Happy Holidays Convention, which offers three options: 1. paying a fixed fee of $3,000, or 2. paying a $1,000 fee plus 10% of revenues made at the convention, or 3. paying 25% of revenues made at the convention. Which of the following statements is FALSE? Her decision will determine the risk she faces. Contribution margin will vary depending upon the option chosen. One of the options will allow Mrs. Tannebaum to break even, even if she doesn't sell any lights. Operating income will be the greatest for Option 3.
Assume that you win a $150,000 cash sweepstakes today. You decide to deposit this cash in an account earning 8% annual interest, and you plan to quit your job when the account equals $555,000. How many years will it be before you can quit working?
Kyle Parker of Concord, New Hampshire, has been shopping for a new car for several weeks. He has negotiated a price of $31,000 on a model that carries a choice of a $2,500 rebate or dealer financing at 2 percent APR. The dealer loan would require a $1,000 down payment and a monthly payment of $526 for 60 months. Kyle has also arranged for a loan from his bank with a 7 percent APR. Use the Run the Numbers worksheet to advise Kyle about whether he should use the dealer financing or take the rebate and use the financing from the bank. Round your answer to two decimal places. Adjusted APR (dealer financing): % Kyle should use -Select-the dealer financingthe financing from the bankItem 2 .
Natalie decides to buy a poodle print. A poodle print is bought for 24 monthly payments of $200. What is the equivalent cash price if the rate is 18% compounded monthly and the first payment is made one month after the purchase? (Remember: Cash = Now)
The top prize for the state lottery is $115,700,000. You have decided it is time for you to take a chance and purchase a ticket. Before you purchase the ticket, you must decide whether to choose the cash option or the annual payment option. If you choose the annual payment option and win, you will receive $115,700,000 in 25 equal payments of $4,628,000—one payment today and one payment at the end of each of the next 24 years. If you choose the cash payment, you will receive a one-time lump sum payment of $53,355,093.34. If you can invest the proceeds and earn 9 percent, which option should you choose? (Round factor values to 3 decimal places, e.g. 1.521.) Lump sum paymentAnnual payment

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