SOLUTION: An oil-drilling company knows that it costs $25,000 to sink a test well. If oil is hit, the income for the drilling company will be $465,000. If only natural gas is hit, the income

Question 878942: An oil-drilling company knows that it costs $25,000 to sink a test well. If oil is hit, the income for the drilling company will be $465,000. If only natural gas is hit, the income will be $150,000. If nothing is hit, there will be no income. If the probability of hitting oil is 1/40 and if the probability of hitting gas is 1/20, what is the expectation for the drilling company?
Answer by ewatrrr(24785) (Show Source): You can put this solution on YOUR website!
Has been answered several times:
E = (1/40)$440,000 + (2/40)$125,000 - (37/40)$25,000
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