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Annie is participating in a winner-take-all World Series of Poker tournament that costs 101010 thousand dollars to enter. The prize for winning the tournament is 500500500 thousand dollars. Annie estimates that there is a 0.5 \%0.5%0, point, 5, percent chance that she will win the tournament. Find the expected value of entering the tournament for Annie.

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spinmaster096

Answer: −7.5 thousand dollars

Step-by-step explanation: Khan Academy

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Using the expected value formulae, the expected value of Annie entering the tournament is -$7950

Creating a probability distribution table :

Net amount won = (500 - 100) = 400 thousand

Amount lost = 100 thousand

X ___ : - 10,000 ____ 400,000

P(X) _ : __ 0.995 _______ 0.005

Using the expected value formulae:

  • E(X) = Σ[X × P(X)]

E(X) = (0.995 × - 10,000) + (0.005 × 400,000)

E(X) = - 9950 + 2000

E(X) = -7950

Hence, the expected value of entering the tournament is -$7950

Learn more : https://brainly.com/question/19236072

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