If one can is selected at random from the cooler, determine the probability that the soda selected is

30 cola

40 orange

10 ginger ale

20 root beer

and Expected Value. If on a $1 bet, Paul Goldstein's expected value is $0.30, what is Paul's expected value on a $5 bet?

Solution:

The probability that the soda selected = 40/(30+40+10+20) = 0.40.

We assume the winning probability is p,

the expected value = $1*p - $1*(1-p) = $0.3

p = 0.65

So when it's $5 bet, the expected value = $5*0.65 - $5*(1-0.65) = $1.5