SITUATION: The ACME company is drilling a pipeline underneath a river. It requires a complex boring machine with which they have little experience If they don't operate the boring machine properly, they could damage the machine and/or riverbank. If they damage the riverbank, environmental groups will work to prevent them from getting future permits for similar projects. Damaging the boring machine could cost $50,000 - $250,000 in repairs and 2-4 weeks in lost time.

PROBABILITIES: These were determined from the experience within the company and interviews with 2 other companies using the boring machine ITEM PROBABILITY $75,000 Equipment Damage 20% $200,000 Equipment Damage 20% No Equipment Damage 60% Riverbank Damage 20% What's the probable cost of equipment damage? Explain your answer.

SITUATION: The ACME company is drilling a pipeline underneath a river. It requires a complex boring machine with which they have little experience If they don't operate the boring machine properly, they could damage the machine and/or riverbank. If they damage the riverbank, environmental groups will work to prevent them from getting future permits for similar projects. Damaging the boring machine could cost $50,000 - $250,000 in repairs and 2-4 weeks in lost time. PROBABILITIES: These were determined from the experience within the company and interviews with 2 other companies using the boring machine ITEM PROBABILITY $75,000 Equipment Damage 20% $200,000 Equipment Damage 20% No Equipment Damage 60% Riverbank Damage 20% What's the probable cost of equipment damage? Explain your