What is the Value of a Raffle Ticket for a $25,000 car

This was a homework assignment.

1. Q: What is the value of a raffle ticket worth to the purchaser of the ticket if there is one winner of a new car worth $25,000 and there are 1,000,000 one dollar tickets sold?

A: Val(raffle ticket); 1 car @ 25K, 10^6 tickets @ 1.00
E(e) = p(e) * V(e)
= 1/(10^6) = .000001 * 25,000
= $.025 per raffle ticket

2. Q. What is the expected total value of a raffle worth to a raffle operator if there is one winner of a new car worth $25,000, there are 1,000,000 one dollar tickets to sell, and the probability of selling all the tickets is 75%?

A. Probability of success/failure times the value of success/failure
.75 * 10^6 = 750,000
750,000 – 25,000(the car cost) = 725,000

These questions were taken from the following booklet

The Role of Probability Theory in Systems Analysis (SA)
Stanley Schuyler, 16 August, 2005
---> users.edinboro.edu/sschuyler/