Cruise with Us is running a promotion to attract new customers and is offering a free around the world cruise to any customer who can sink a hole in one on a professional golf course located near Cruise with Us' corporate headquarters. The cost of the around the world cruise is $50,000 and Cruise with Us is running the promotion for a month. The probability that a customer can sink a hole in one during the one month period is 5 percent. What is the expected cost of the promotion?

Question

Quizplus · Accepted Answer

The expected cost of the promotion is calculated by multiplying the probability of the event (a customer sinking a hole in one) by the cost of the event (the cost of the cruise). Thus, 0.05 (5 percent) * $50,000 = $2,500.

Cruise with Us Is Running a Promotion to Attract New