200 tickets are sold to a raffle. It costs $5 to buy a ticket. There is one first prize winner and one second prize winner. First prize is $500. Second prize is $250. What is the value of playing this game?

Answer 1

prob of winning = 1/200
expected value
= (1/200)(500) + (1/200)(250)
= 3.75

Since you are paying $5.00 to play, the expected outcome is a loss of $1.25