Calculate the expected net payoffs for each outcomes

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Question: Suppose that a certain casino has the "money wheel" game. The money wheel is divided into 50 sections, and the wheel has an equal probability of stopping on each of the 50 sections when it is spun. Twenty-two of the sections on this wheel show a $1 bill, 14 show a $2 bill, 7 show a $5 bill, 3 show a $10 bill, 2 show a $20 bill, 1 shows a flag, and 1 shows a joker. A gambler may place a bet on any of the seven possible outcomes. If the wheel stops on the outcome that the gambler bet on, he or she wins. The net payoffs for these outcomes for $1 bets are as follows.

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a. If the gambler bets on the $1 outcome, what is the expected net payoff?

b. Calculate the expected net payoffs for each of the other six outcomes.

c. Which bet(s) is (are) best in terms of expected net payoff? Which is (are) worst?

Reference no: EM131679706

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