Problem 12.7

# Problem 12.7 - Problem 12.7 Excel Solution Making Hard...

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Problem 12.7- Excel Solution 10.0% #ADDIN? \$200,000 #ADDIN? #ADDIN? Chance -\$10,000 #ADDIN? 90.0% #ADDIN? \$0 #ADDIN? Decision #ADDIN? #ADDIN? #ADDIN? \$0 #ADDIN? Oil wildcatting Oil wildcatting Drill Drill Don't drill Don't drill Strike oil Strike oil Dry hole Dry hole The expected value of drilling is \$10K versus \$0 for not drilling. Choose to drill.

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#ADDIN? #ADDIN? \$190,000 #ADDIN? 10.0% Decision #ADDIN? #ADDIN? #ADDIN? \$0 #ADDIN? #ADDIN? Chance 0 #ADDIN? #ADDIN? #ADDIN? -\$10,000 #ADDIN? 90.0% Decision \$0 #ADDIN? #ADDIN? #ADDIN? \$0 #ADDIN? Decision #ADDIN? 10.0% #ADDIN? \$200,000 #ADDIN? #ADDIN? Chance -\$10,000 #ADDIN? 90.0% #ADDIN? \$0 #ADDIN? #ADDIN? Decision 0 #ADDIN? #ADDIN? #ADDIN? \$0 #ADDIN? With Information With Information Get Perfect Info Get Perfect Info No Information No Information Drill Drill Don't drill Don't drill Strike oil Strike oil Dry hole Dry hole "Strike oil" "Strike oil" "Dry hole" "Dry hole" Drill
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Problem 12.7 - Problem 12.7 Excel Solution Making Hard...

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