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

Regression dilution, Regression dilution is the term which is applied when...

Regression dilution is the term which is applied when a covariate in the model cannot be measured directly and instead of that a related observed value must be used in analysis. I

Explain lattice distribution, Lattice distribution : A class of probability...

Lattice distribution : A class of probability distributions to which most of the distributions for discrete random variables used in statistics belongs. In such type of distributio

Homework help, Q1: The growth in bad debt expense for Aptara Pvt. Ltd. Comp...

Q1: The growth in bad debt expense for Aptara Pvt. Ltd. Company over the last 20 years is as follows. 1997 0.11 1998 0.09 1999 0.08 2000 0.08 2001 0.1 2002 0.11 2003 0.12 2004 0.1

Balanced incomplete block design, Balanced incomplete block design : A desi...

Balanced incomplete block design : A design in which all the treatments are not used in all blocks. Such designs have the below stated properties: * each block comprises the

Describe probability distribution, Probability distribution : For the discr...

Probability distribution : For the discrete random variable, a mathematical formula which provides the probability of each value of variable. See, for instance, binomial distributi

Describe length-biased sampling, Length-biased sampling : The bias which ar...

Length-biased sampling : The bias which arises in the sampling scheme based on the visits of patient, when some individuals are more likely to be chosen than others simply because

Confidence interval estimation, An auditor for a government agency needs to...

An auditor for a government agency needs to evaluate payments for doctors' office visits paid by Medicare in a small regional town during the month of June. A total of 25,056 visit

Quantitative Analysis for Management Chapter 4, 4-13. Students in a manage...

4-13. Students in a management science class have just received their grades on the first test. The instructor has provided information about the first test grades in some previou

Forecast, The particular projection which an investigator believes is most ...

The particular projection which an investigator believes is most likely to give an accurate prediction of the future value of some process. Commonly used in the context of the anal

Define least significant difference test, Least significant difference test...

Least significant difference test is an approach to comparing a set of means which controls the family wise error rate at some specific level, let's assume it to be α. The hypothe

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