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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
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 $40 million if successful (probability .2) and lose $3 million if not (probability .8); site B will net $70 million if successful (probability .1) and lose $5 million if not (probability .9). a) What is the expected return for site A ? (Give answer in units of a million rounded to 1 decimal place.) Example: -3.5 million 4 b) What is the expected return for site B? A c) Which site should the company choose? Type A or B 4
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