document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=892966>Question 892966</A>: <I><SPAN STYLE=\"word-break: break-all;\"> 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 $335,000. If only natural gas is hit, the income will be $125,000. 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?<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #540995 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=540995\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> 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 $335,000. If only natural gas is hit, the income will be $125,000. 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?<BR>\n" );
document.write( "Ans::<BR>\n" );
document.write( "E = (1/40)(310000) + (1/20)(100,000) + (37/40)(-25000)<BR>\n" );
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document.write( "E = [310000 + 2*100,000 - 37*25000)/40 = -$10375<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
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