Question
Decision analysis. After careful testing and analysis, an oil company is considering drilling in two different sites. It is estimated that site A will
Decision analysis. After careful testing and analysis, an oil company is considering drilling in two different sites. It is estimated that site A will net $20 million if successful (probability 2) and lose $4 million if not (probability .8); site B will net $60 million if successful (probability .1) and lose $6 million if not (probability .9). Which site should the company choose according to the expected return from each site? a. What is the expected return for site A? $ million b. What is the expected return for site B? $ million c. Which site should the company choose? O Site B O Site A 13
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