Question

In: Statistics and Probability

The college hiking club is having a fund raiser to buy new equipment for fall and...

The college hiking club is having a fund raiser to buy new equipment for fall and winter outings. The club is selling Chinese fortune cookies at a price of $1 per cookie. Each cookie contains a piece of paper with a different number written on it. A random drawing will determine which number is the winner of the dinner for two at a local Chinese restaurant. The dinner is valued at $35. Since the fortune cookies were donated to the club, we can ignore the cost of the cookies. The club sold 701 cookies before the drawing.

(a) Lisa bought 22 cookies. What is the probability she will win the dinner for two? (Round your answer to three decimal places.)


What is the probability she will not win? (Round your answer to three decimal places.)


(b) Lisa's expected earnings can be found by multiplying the value of the dinner by the probability that she will win. What are Lisa's expected earnings? (Round your answer to two decimal places.)
$   

How much did she effectively contribute to the hiking club? (Round your answer to two decimal places.)
$

Solutions

Expert Solution

a) As there is only 1 winning number out of the 701 cookies sold, therefore there have to be 700 non winning numbers and 1 winning number

The probability that she will win the dinner is computed here as:

= Number of ways to select 1 winning ticket out of the winning ticket * Probability that rest 21 tickets are picked from the 700 non winning tickets / Total number of ways to select 22 tickets from 701 tickets

Therefore 0.031 is the required probability here.

Now the probability that she will not win is computed as:

= 1 - Probability that she will win

= 1 - 0.031

= 0.969

Therefore 0.969 is the required probability here.

b) The expected earnings for Lisa could be computed here as:

= 35* Probability that she will win

= 35* 0.031

= $1.10

Therefore $1.10 are Lisa's expected earnings here.

Now The effective contribution to the hiking club here is computed as:

= Cost of 22 tickets - Expected earnings

= 22*1 - 1.10

= $20.90

Therefore $20.90 is the effective contribution made by here.

orchestra answered 2 years ago
Next > < Previous

Related Solutions

The Business Club at Elk College Our VP of Marketing just learned the Business Club at...
The Business Club at Elk College Our VP of Marketing just learned the Business Club at Elk College (BCEB) is hosting the State Conference of Business Clubs on April 9 – 11, 2018 at the Central Downtown Campus in Dallas, Texas. Jack Morton director of the club has requested an Information System to register, monitor and house participants for the conference. BCEB has requested through the Director of Computer Systems Support that (You), one of our Marketing officers, investigate and...
The Barnstormer Corp. needs new equipment that would cost $3.5 million and would fall into the...
The Barnstormer Corp. needs new equipment that would cost $3.5 million and would fall into the MACRS 5-year class for depreciation purposes. Maintenance would be $160,000 per year, payable at the beginning of each year, if they buy the equipment themselves. They could borrow at a 9% rate of interest, before tax, if they were to buy the equipment directly. They plan on using the equipment for 5 years before it will need to be replaced with something more modern....
Nodhead College needs a new computer. It can either buy it for $320,000 or lease it...
Nodhead College needs a new computer. It can either buy it for $320,000 or lease it from Compulease. The lease terms require Nodhead to make six annual payments (prepaid) of $76,000. Nodhead pays no tax. Compulease pays tax at 40%. Compulease can depreciate the computer for tax purposes straight-line over five years. The computer will have no residual value at the end of year 5. The interest rate is 6%. a. What is the NPV of the lease for Nodhead...
Nodhead College needs a new computer. It can either buy it for $250,000 or lease it...
Nodhead College needs a new computer. It can either buy it for $250,000 or lease it from Compulease. The lease terms require Nodhead to make six annual payments (prepaid) of $62,000. Nodhead pays no tax. Compulease pays tax at 35%. Compulease can depreciate the computer for tax purposes using 5-year MACRS. The computer will have no residual value at the end of year 5. The interest rate is 8%. a. What is the NPV of the lease for Nodhead College?...
Nodhead College needs a new computer. It can either buy it for $250,000 or lease it...
Nodhead College needs a new computer. It can either buy it for $250,000 or lease it from Compulease. The lease terms require Nodhead to make six annual payments (prepaid) of $62,000. Nodhead pays no tax. Compulease pays tax at 35%. Compulease can depreciate the computer for tax purposes using 5-year MACRS. The computer will have no residual value at the end of year 5. The interest rate is 8%. a. What is the NPV of the lease for Nodhead College?...
Comey Products has decided to acquire some new equipment having a $270,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment having a $270,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 10% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 5% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment will last 4 years and is in the MACRS 3-year class. (The depreciation rates for Year 1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.) The firm can borrow at a 5% rate and pays a 25% federal-plus-state tax rate. Comey is considering leasing the property but wishes to know the cost of borrowing that it should use when comparing purchasing...
Rodriguez began reviewing a proposal for a new hiking shoe being considered. The hiking shoe would...
Rodriguez began reviewing a proposal for a new hiking shoe being considered. The hiking shoe would be named Persistence. The hiking and active walking sector was one of the fastest growing areas of the footwear industry and one they had not yet entered. The business case for the hiking shoe needed some work; but after preliminary analysis, she focused on the following information: 1. The life of the Persistence project would be only three years, given the steep technological learning...
You are the supervisor on the audit of New Generation Club, a large suburban club in...
You are the supervisor on the audit of New Generation Club, a large suburban club in New South Wales. As well as the usual club facilities such as poker machines, bars and a bistro, the club also operates a large gymnasium, an indoor heated pool and a restaurant. The following dates are relevant to the current audit engagement: End of the reporting period 30 June 2019 Financial statements signed 15 August 2019 Auditor’s report signed 15 August 2019 Annual report...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT