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jashelton · Mar 4, 2007, 04:52 PM

1)
A magazine subscription company runs a contest where the first prize is $100,000 ; second is $50,000 and third is $25,000. If the company receives 1,000,000 entries; what is the expectation for a person who enters the contest? If the entrant must use a 1st class stamp to send the entry, what can you conclude about the cost of entering the contest?

galactus · Mar 4, 2007, 06:47 PM

Since the price of a stamp is currently 39 cents.

$\frac{99,999.61}{1,000,000}+\frac{49,999.61}{1,000 ,000}+\frac{24,999.61}{1,000,000}+(-0.39)\frac{999,997}{1,000,000}=-0.215$

One can expect to lose 21.5 cents by playing.