An advertisers gimmick tells you to tear a coupon off the ba

An advertiser’s gimmick tells you to tear a coupon off the back of a package and mail it to a contest address. If you are the lucky winner, you get a prize worth $1,000. For every 50,000 coupons sent in, one will be drawn. Say the cost of mailing (postage, envelope, etc.) is $0.55. What is the expected value of mailing in the coupon?

Solution

Consider:

Hence, E(x) = Sum(xP(x)) =  -$0.53 [ANSWER]