A math club is researching a golf tournament fund-raiser. It will cost $1,000 to host the tournament. If it rains, the club will lose the investment. If it is sunny, it is expected that the club will collect $4,500 from the participants. If the chance of rain is 20%, what is the expected value for the tournament?

If it rains (20% chance), the club loses its $1,000 cost, so the outcome is −$1,000. If it is sunny (80% chance), the club collects $4,500 and pays the $1,000 cost, for a net gain of $3,500. The expected value is 0.20(−$1,000) + 0.80($3,500) = −$200 + $2,800 = $2,600, so the expected value is $2,600.

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