An Alberta oil company routinely seeks new sites for oil drilling. With no other information, there is a 50-50 chance of striking oil. If a well is found, a profit of $150,000 is realized. If the site is dry, a loss of $100,000 is incurred. Find the optimal strategy and the EVPI.

For the Alberta oil company, we may conduct a geological survey for $20,000. The survey may provide strong evidence that there is oil or strong evidence that the site is dry. Past history indicates that when there really is oil, the survey is correct 90% of the time; when the site is dry, the survey is correct 80% of the time. Is the survey worthwhile?