Qing and her coworkers like to bet each year on who will win the NCAA basketball tournament. Each person pays $50 to be part of the pool. Qing estimates that she has a 10% chance of winning the pot, equal to $1,000, paid half now and the other half at the start of the same tournament next year. What is Qing's expected present value of playing if the interest rate is 2.5%?

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The Answer of Qing and her coworkers like to bet each year on who will win the NCAA basketball tournament. Each person pays $50 to be part of the pool. Qing estimates that she has a 10% chance of winning the pot, equal to $1,000, paid half now and the other half at the start of the same tournament next year. What is Qing's expected present value of playing if the interest rate is 2.5%?

Qing and Her Coworkers Like to Bet Each Year on Who