Question

In: Advanced Math

A town offers a lottery. To win the grand prize of $1,000,000, your ticket needs to...

  1. A town offers a lottery. To win the grand prize of $1,000,000, your ticket needs to consist of the winning seven numbers chosen from the set {1, 2, …, 55}. To win the lesser prize of $10,000, your ticket needs to have exactly five of the seven.

a) What is the probability of winning the grand prize?

b) What is the probability of winning the lesser prize?

c) If a lottery ticket costs $1, what is the expected value of playing this lottery?

Solutions

Expert Solution

ANSWER:-


Related Solutions

Jack and Diane are lottery winners. They hold the ticket to the Grand Prize in the...
Jack and Diane are lottery winners. They hold the ticket to the Grand Prize in the “Set for Life” Prize that makes 20 consecutive annual payments of $50,000 starting immediately. There is one hitch: the eleventh payment (to be received at the end of year 10) is not $50,000 but only $20,000 (that is, this payment is $30,000 LESS than the other 20). Which of the following comes closest to the present value of the prize if interest rates are...
A lottery offers the chance to win a prize of receiving payments forever starting with $200...
A lottery offers the chance to win a prize of receiving payments forever starting with $200 for the first payment followed by each consecutive payment increasing by $250 until the payment size reaches $700. If you receive a payment every quarter, with the first in one quarter and interest is earned at j4 = 5%, what amount must the lottery have in the account today to fund the prize?
Suppose that you win the Lottery. The stated prize is $402 million. If you agree to...
Suppose that you win the Lottery. The stated prize is $402 million. If you agree to take the payout over 30 years in the form of an annuity due, then each payment equals the stated prize divided by 30. The first payment will be made to you immediately, and the remaining 29 future payments will be paid out annually (beginning one year from today). Alternatively, you can take the lump sum payout. This payout is calculated as the present value...
The state lottery claims that its grand prize is $2 million. The lucky winner will receive...
The state lottery claims that its grand prize is $2 million. The lucky winner will receive $200,000 upon presentation of the winning ticket plus $200,000 at the end of each year for the next 19 years. Assume your own discount rate. a-Why isn't this really a million-dollar prize? (5 Points) b-What would it actually be worth in dollars to you? (5 Points) c-What would the 20 yearly payments need to be for the present value of the lottery to be...
A lottery has a grand prize of $100,000, two runner-up prizes of $12,500 each,
A lottery has a grand prize of $100,000, two runner-up prizes of $12,500 each, four third-place prizes of $2000 each, and six co nsolation prizes of $200 each. If 200,000 tickets are sold for $1 each and the probability of any one ticket winning is the same as that of any other ticket winning, find the expected return on a $1 ticket. (Round your answer to two decimal places.) 
You win the grand prize on a game show. You have the following choices: Option 1:...
You win the grand prize on a game show. You have the following choices: Option 1: $1-million dollars paid as a $25 000 annuity every year over 40 years. Option 2: The present value of option 1 if the current interest rate is 4%, compounded annually. Determine the present value of option 2. If you can reinvest the $1 000 000 at 5%, compounded annually, over 40 years how much more money would you have than if you accepted Option...
While in Mexico, you buy a lottery ticket and win. The award is 5 annual payments...
While in Mexico, you buy a lottery ticket and win. The award is 5 annual payments of MXN 1,000,000 with the first payment made today. The APR interest rate for 4 years of future MXN cash flows is 6% and for USD cash flows is 2%. The exchange rate today is MXN19.6/USD. What is the value today of your winnings in terms of USD? Show the result taking the present value (PV) in both currencies (hint: determine expected exchange rates...
Congratulations! You have won the $ 1 million lottery grand prize. You have been presented with...
Congratulations! You have won the $ 1 million lottery grand prize. You have been presented with several payout alternatives, and you have to decide which one to accept.                                 The alternatives are as follows:             $1 million today             $1.2 million lump- sum in two years.             $1.5 million lump-sum in five years.             $2 million lump-sum in eight years. Your cousin, s stockbroker, advises you that over the long-term you should be able to earn ten percent on an investment portfolio. You are intrigued...
A lottery claims its grand prize is $10 million, payable over five years at $2 million...
A lottery claims its grand prize is $10 million, payable over five years at $2 million per year. If the first payment is made immediately, what is this grand prize really worth? Use an interest rate of 6%.
You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or...
You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or putting it in a bank account for 5 years that pays you 5% per annum. Calculate the opportunity cost of spending money now?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT