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A local club plans to invest $10000to host a baseball game. They expect to sell tickets...

A local club plans to invest $10000to host a baseball game. They expect to sell tickets worth $15750. But if it rains on the day of game, they won't sell any tickets and the club will lose all the money invested. If the weather forecast for the day of game is 20% possibility of rain,what is the expected value of investing in the baseball game?

Rain

No Rain

Probability

0.2

Leave money in bank

10000

10000

Invest in Baseball game

0

15750

round to 2 decimal points

math   Statistics-And-Probability   
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Answer #1

Expected value of investing in baseball game

= $0 * 0.2 + $15750 * (1 - 0.2)

= $ 15750 * 0.8

= $ 12600

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