expected monetary value, Advanced Statistics

Assignment Help:
Ask quesoil company is considering whether or not to bid for an offshore drilling contract. If they bid, the value would be $600m with a 65% chance of gaining the contract. The company may set up a new drilling operation or move its already existing operation, which has proved successful to the new site. The probability of success and expected returns (in $m) are as follows:
outcome New operation Existing operation
Probability Expected return Probability Expected return
Success 0.75 800 0.85 700
Failure 0.25 200 0.15 350

If the company does not bid or lose the contract, they can use the $600m to modernise their operations. This would result in a return of either 5% or 10% on the sum invested with probabilities 0.45 and 0.55 respectively.
With the aid of a decision tree, prepare a detailed quantitative report advising the company on the best course of action.

tion #Minimum 100 words accepted#

Related Discussions:- expected monetary value

Math, A standard IQ test has a mean of 98 and a standard deviation of 16. W...

A standard IQ test has a mean of 98 and a standard deviation of 16. We want to be 99% certain that we are within 8 IQ points of the true mean. Determine the sample size

Regression, regression line drawn as Y=C+1075x, when x was 2, and y was 239...

regression line drawn as Y=C+1075x, when x was 2, and y was 239, given that y intercept was 11. calculate the residual

Define recurrence risk, Recurrence risk : Usually the probability that an i...

Recurrence risk : Usually the probability that an individual experiences an event of interest given previous experience(s) of the event; for example, the probability of recurrence

TIME SERIES, moving and semi average method graphical reprsentation

moving and semi average method graphical reprsentation

Student, the problem that demonstrates inference from two dependent samples...

the problem that demonstrates inference from two dependent samples uses hypothetical data from TB vaccinations and the number of new cases before and after vaccinations for cases o

Homework and Assignment assistance for RES610 Course, Interested in 10 hour...

Interested in 10 hour program with twice a week tutoring for 1 hour each. Need tutor to assist with answering the assignment questions for the next 5 weeks.

Two-phase sampling, Two-phase sampling is the sampling scheme including tw...

Two-phase sampling is the sampling scheme including two distinct phases, in the first of which the information about the particular variables of interest is collected on all the m

Normal distribution, Your first task is to realize two additional data gene...

Your first task is to realize two additional data generation functions. Firstly, extend the system to generate random integral numbers based on normal distribution. You need to stu

Clustered data, Clustered data : The term applied to both the data in whic...

Clustered data : The term applied to both the data in which the sampling units are grouped into the clusters sharing some common feature, for instance families or geographical reg

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd