expected monetary value, Advanced Statistics

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#
Posted Date: 3/23/2016 5:44:16 AM | Location : Malawi







Related Discussions:- expected monetary value, Assignment Help, Ask Question on expected monetary value, Get Answer, Expert's Help, expected monetary value Discussions

Write discussion on expected monetary value
Your posts are moderated
Related Questions
Multitrait multi method model (MTMM) is the form of confirmatory factor analysis model in which the different techniques of measurement are used to measure each of the latent vari

Labour force survey : This survey carried out in the UK on the quarterly basis since the spring of year 1992. It covers 60 000 households and gives labour force and other detail

The process of providing the numerical value for the population parameter on the basis of information gathered from a sample. If a single ?gure is computed for the unknown paramete

Window estimates is a term which occurs in the context of the both frequency domain and time domain estimation for the time series. In the previous it generally applies to weights

Computer-intensive methods : The statistical methods which require almost identical computations on the data repeated number of times. The term computer intensive is, certainly, a

facts and statistics about daycare

Models which make use of the smoothing techniques such as locally weighted regression to identify and represent the possible non-linear relationships between the explanatory and th

Build-Rite construction has received favorable publicity from guest appearances on a public TV home improvement program. Public TV programming decisions seem to be unpredictable, s

Briefly explain the importance of forecasting for managers?

Dear Experts, Please note that I''m doing a PhD in Business management under the title: Technology transfer and competitive advantage in Qatar oil and gas companies. It is a quant