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

Two - stage distillation process, A mixture of benzene, toluene, and xylene...

A mixture of benzene, toluene, and xylene enters a two-stage distillation process where some of the componentsare recovered. The distillation process operates at steady-state condi

Frailty, A term usually used for unobserved individual heterogeneity. Such ...

A term usually used for unobserved individual heterogeneity. Such variation is of main concern in the medical statistics particularly in the analysis of the survival times where ha

Ain why the simulated result doesn''t have to be exact as the, ain why the ...

ain why the simulated result doesn''t have to be exact as the theoretical calculation

Buffon''s needle problem, Buffon's needle problem : A problem proposed and ...

Buffon's needle problem : A problem proposed and solved by the scientist Comte de Buffon in 1777 which includes determining the probability, p, which a needle of length l will inte

Describe hello-goodbye effect., Hello-goodbye effect : The phenomenon initi...

Hello-goodbye effect : The phenomenon initially described in psychotherapy research, but one which might arise whenever a subject is assessed on two occasions, with some interventi

Correlated failure times, Data which occur when failure period is recorded ...

Data which occur when failure period is recorded which are dependent. Such type of data can arise in number contexts, for instance, in epidemiological cohort studies in which th

Graduation, Graduation is the term is employed most often in the applicati...

Graduation is the term is employed most often in the application of the actuarial statistics to denote procedures by which the set or group of observed probabilities is adjusted t

Basic reproduction number, Basic reproduction number : A term used in the t...

Basic reproduction number : A term used in the theory of infectious diseases for the number of secondary cases which one case would generate in a completely susceptible population.

Median, Median is the value in a set of the ranked observations which divi...

Median is the value in a set of the ranked observations which divides the data into two parts of equal size. When there are an odd number of observations the median is middle v

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