How to calculate expected value ? Example : Recently , a regional automobile dealership sent out fliers to perspective customers indicating that they had already won one of three different prizes : an automobile valued at $25,000 , a $100 gas card , or a $5 Walmart shopping card. To claim his or her prize, a prospective customer needed to present the flier at the dealership's showroom . The fine print on the back of the flier listed the probabilities of winning . The chance of winning the car was 1 out of 31,478 , and the chance of winning the gas card was 1 out of 31,478 , and the chance of winning the shopping card was 31,476 out of 31,478 . Calculate the expected value of the prize won by a prospective customer receiving a flier as follows: Expected value of prize won -> (Prize value of each pricex probability) Expected value of prize won = $25,000x 1 31, 478 + $100 * + $5x 31,476 31,478 31,478 - ($0.79) +($0.00317)+($4.99) -$5.78 Thus, the expected value of the prize won by a prospective customer receiving a flier is $5.78. How to calculate expected value with frequencies