When a company decides to drill a new oil well, it costs the company $450,000. When they drill, there is a 70% probability that the drilled well is dry. There is a 25% chance that the oil is a producing oil well, and can be sold for $1,250,000 and there is a 5% chance the well is a super producer and it can be sold for $2,000,000. Calculate the company’s expected value of drilling this well.

When a company decides to drill a new oil well, it costs the company $450,000. When they drill, there is a 70% probability that the drilled well is dry. There is a 25% chance that the oil is a producing oil well, and can be sold for $1,250,000 and there is a 5% chance the well is a super producer and it can be sold for $2,000,000. Calculate the company’s expected value of drilling this well.

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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