Q.5 Mr. Anish had to decide whether or not to drill on his farm. In his town, only 40% of the wells drilled were successful at 200 feet of depth. Some of the farmers, who did not get water at 200 feet, drilled further upto 250 feet but only 20% struck water at 250 feet. Cost of drilling is $50 per foot. Mr. Anish estimated that he would pay $18,000 during four year period in the present value terms, if he continues to buy water from the neighbour rather than go for the well which should have a life of four years. Mr. Anish has three decisions to make (a) should he drill upto 200 feet, and (b) if no water is found at 200 feet, should he drill upto 250 feet? (c) Should he continue to buy water from his neighbour? Draw a decision tree and choose the appropriate action.