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Shamrock Oil owns a parcel of land that has the potential to be an underground oil field. It will cost $ 4 5 0 ,
Shamrock Oil owns a parcel of land that has the potential to be an underground oil field. It will cost $ to drill for oil. If oil does exist on the land, Shamrock will realize a payoff of $
not including drilling costs With current information, Shamrock estimates that there is a probability that oil is present on the site. Shamrock also has the option of selling the land as is for
$ without further information about the likelihood of oil being present. A third option is to perform geological tests at the site, which would cost $ There is a chance that the test
results will be positive, after which Shamrock can sell the land for $ or drill the land, with a probability that oil exists. If the test results are negative, Shamrock can sell the land for
$ or drill the land, with a probability that oil exists. Using a decision tree, recommend a course of action for Shamrock Oil.
Choose the correct decision tree that corresponds to the options of Shamrock Oil. Note that all payoffs are in thousands of dollars.
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