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What is the expected value of sinking a test well

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An oil company determines it costs $25,000 to sink a test well, an oil hit yields a net revenue of $475,000($500,000 gross-$25,000costs), and a natural gas hit yields $125,000 net revenue ($150,000 gross-$25,000 costs). If the probability of hitting oil is 3% and gas is 6%, what is the expected value of sinking a test well?

Reference no: EM132127938

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