Answer:
-$4
Step-by-step explanation:
The expected payback formula is the sum of probability multiply the value
E(x) = p(x1)*x1 + p(x2)*x2 + .....
In this case, we have two possibility of payback
1) winning
The payback is $400 -$8 = $392
x1 = 392
The probability of winning is one out of 100 (since the choices are 0 to 99)
p(x1) = 1/100
2. Losing
The payback is -$8 since the person didn't win anything is loose
x2 = -8
Since there is only one winning number, the other 99 numbers are loosing numbers
p(x2) = 99/100
Therefore expected payback is
E(x) = p(x1)*x1 + p(x2)*x2
= (1/100)*392 + (99/100)*(-8)
= -400/100
= -$4
