SOLUTION: A multinational oil company is considering setting up a subsidiary in Grenada. They realize that the success depends in part on the ensuing political climate in Grenada. Manageme
Question 1166446: A multinational oil company is considering setting up a subsidiary in Grenada. They realize that the success depends in part on the ensuing political climate in Grenada. Management estimates the probability of success (in terms of resulting revenues from the subsidiary during its first year of operation) is 0.55 if the prevailing political condition is favorable, 0.30 if the political condition is neutral and 0.10 if the prevailing political condition is unfavorable. They further estimate the probabilities of favorable, neutral, and unfavorable as 0.6, 0.2 and 0.2 respectively. What is the probability of success of the new subsidiary?