An oil company is considering 2 sites on which to drill, described as follows:

Site A: profit of oil is found: $60 million

Loss if no oil is found: $5 million

Probability of finding oil: 0.2

Site B: profit of oil is found: $90 million

Loss of no oil is found: 0.1

A: Which site has the larger expected profit?

B: if the expected profit for both sites is not the same, by how much is the expected profit larger?

Question

Case Chapman

3 April, 21:20

+3

Answers (1)

Know the Answer?

Koen Jacobson · Answer 1

A) site A has a larger probablility of finding oil

B) the difference between amount of profitmade is 30 million.