Problem: You are trying to host a fancy gala for work donations. But there is a significant up-front cost, approximately $15,000 for the 300 people who will attend. Your boss is skeptical that hosting an event with such a high cost could be profitable.
You are confident that there is a chance that you could bring in as much as $100,000 in donations. It happens about 5% of the time. Most often, about 45% of the time, these types of events bring in about $75,000 in donations. Even when the event does not go as well, about 30% of the time such events are still able to bring in $15,000. They very rarely bring in less. About 15% of the time, only $5,000 in donations and the rest of the time, they end up not bringing anything.
Write a 150 word memo to state why you think it IS worth hosting by calculating the expected value of the event. Show your work and the calculations.