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Scholarship A is worth $2000 and costs $10 to apply. Scholarship B is worth $4000 and costs $25 to apply. You have a 5% chance of receiving Scholarship A and a 1% chance of receiving the Scholarship B.

 

(a) What is your expected value for Scholarship A? 
$  ______________

(b) What is your expected value for Scholarship B? 
$  ________
 

Guest Sep 30, 2018
 #1
avatar+2319 
+1

\(P[\text{getting scholarship A}] = 0.05 \\ P[\text{getting scholarship B}] = 0.01\\ E[\text{Value of scholarship A }]= 0.05(2000-10) + 0.95(-10) = $90\)

 

similarly

 

\(E[\text{Value of scholarship B}] = 0.01(4000-25) + 0.99(-25) = \$15\)

Rom  Oct 1, 2018
 #2
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+1

Thanks 

Guest Oct 1, 2018

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