Solution Question 7.32

Solution Question 7.32 - QUESTION 7.32 Max Profit Dry...

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Drill at Site 2 Drill at Site 1 Low (0.8) Dry (0.2) Max Profit -100K -200K 50K High (0.025) Dry (0.850) 150K Low (0.125) 500K -100K High (0.15) Dry (0.60) 150K Low (0.25) No Dome (0.4) Dome (0.6) 500K Prob Profit Prob*Profit 0.600 -100.00 -60.00 0.250 150.00 37.50 0.150 500.00 75.00 52.50 Prob Profit Prob*Profit 0.850 -100.00 -85.00 0.125 150.00 18.75 0.025 500.00 12.50 -53.75 Prob Profit Prob*Profit 0.200 -200.00 -40.00 0.800 50.00 40.00 0.00 Prob Profit Prob*Profit 0.600 52.50 31.50 0.400 -53.75 -21.50 10.00 EMV=0K EMV=- 53.75K EMV=52.50K EMV=10K QUESTION 7.32 EMV=10K
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Drill at Site 2 Drill at Site 1 Low (0.8) Dry (0.2) Max Profit -100K -200K 50K High (0.025) Dry (0.850) 150K Low (0.125) 500K -100K High (0.15) Dry (0.60) 150K Low (0.25) Dome (0.908) 500K EMV=0K QUESTION 7.32. A POSITIVE TEST RESULT Dome) Dome)P(No No | P( e) Dome)P(Dom | e) Dome)P(Dom | ) | Dome ( P + + + + = + 908 . 0 40 . 0 ) 85 . 0 1 ( 60 . 0 99 . 0 60 . 0 99 . 0 = - + = EMV=52.50K EMV=- 53.75K Prob Profit Prob*Profit 0.908 52.50 47.67 0.092 -53.75 -4.95 42.73 EMV=42.73K 0.99 Dome) | = + 0.85 No
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This note was uploaded on 12/04/2011 for the course BUSINESS 500 taught by Professor John during the Spring '11 term at Kansas.

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Solution Question 7.32 - QUESTION 7.32 Max Profit Dry...

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