document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1201804>Question 1201804</A>: <I><SPAN STYLE=\"word-break: break-all;\"> An oil drilling company is considering 2 sites for its well. The probabilities for getting a dry, a low-producing, or a high-producing well at site A are 0.6, 0.25, and 0.15, respectively. The costs for the 3 eventualities are −$300,000, $450,000, and $1,500,000.\r<BR>\n" );
document.write( "\n" );
document.write( "For site B, the probability of finding a dry well, resulting in a $240,000 loss, is 0.2. The company estimates that the probability of a low-producing well is 0.8, and in that case it would make $60,000.\r<BR>\n" );
document.write( "\n" );
document.write( "(Part 1:) Make a tree diagram for this situation and find the expected value for site A.\r<BR>\n" );
document.write( "\n" );
document.write( "(Part 2:) Find the expected value for site B.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "----<BR>\n" );
document.write( "Thank you! </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #836308 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52781)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><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/cgi-bin/show-face.mpl?user=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=836308\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .<BR>\n" );
document.write( "An oil drilling company is considering 2 sites for its well. <BR>\n" );
document.write( "The probabilities for getting a dry, a low-producing, or a high-producing well at site A are <BR>\n" );
document.write( "0.6, 0.25, and 0.15, respectively. <BR>\n" );
document.write( "The costs for the 3 eventualities are −$300,000, $450,000, and $1,500,000.<BR>\n" );
document.write( "For site B, the probability of finding a dry well, resulting in a $240,000 loss, is 0.2. <BR>\n" );
document.write( "The company estimates that the probability of a low-producing well is 0.8, <BR>\n" );
document.write( "and in that case it would make $60,000.<BR>\n" );
document.write( "(Part 1:) Make a tree diagram for this situation and find the expected value for site A.<BR>\n" );
document.write( "(Part 2:) Find the expected value for site B.<BR>\n" );
document.write( "~~~~~~~~~~~~~~~~~~~~\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "<PRE STYLE=\"white-space: pre-wrap; white-space: -moz-pre-wrap; white-space: -pre-wrap; white-space: -o-pre-wrap; word-wrap: break-word;\">\r\n" );
document.write( "                                        Part 1\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "For site A, there are 3 possible outcomes with described probabilities and costs.\r\n" );
document.write( "\r\n" );
document.write( "So, the expected value for site A is the sum of three addends\r\n" );
document.write( "\r\n" );
document.write( "    expected value for site A = 0.6*(-300000) + 0.25*450000 + 0.15*1500000 = 157500  dollars.\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "                                        Part 2\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "For site B, there are 2 possible outcomes with described probabilities and costs.\r\n" );
document.write( "\r\n" );
document.write( "So, the expected value for site B is the sum of two addends\r\n" );
document.write( "\r\n" );
document.write( "    expected value for site A = 0.2*(-240000) + 0.8*60000 = 0  dollars.\r\n" );
document.write( "</PRE>\r<BR>\n" );
document.write( "\n" );
document.write( "Solved.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "------------------\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "If you want to see other similar &nbsp;(and different) &nbsp;solved problems on &nbsp;Mathematical expectation<BR>\n" );
document.write( "to make your horizon wider, &nbsp;look in the lessons\r<BR>\n" );
document.write( "\n" );
document.write( "&nbsp;&nbsp;&nbsp;&nbsp;- <A  rel=nofollow HREF=https://www.algebra.com/algebra/homework/Probability-and-statistics/Math-expectation-of-winning-in-game-problems.lesson>Math expectation of winning in games problems</A> \r<BR>\n" );
document.write( "\n" );
document.write( "&nbsp;&nbsp;&nbsp;&nbsp;- <A  rel=nofollow HREF=https://www.algebra.com/algebra/homework/Probability-and-statistics/Math-expectation-of-winning-in-lottery-problems.lesson>Math expectation of winning in lottery problems</A> \r<BR>\n" );
document.write( "\n" );
document.write( "&nbsp;&nbsp;&nbsp;&nbsp;- <A  rel=nofollow HREF=https://www.algebra.com/algebra/homework/Probability-and-statistics/Math-expectation-of-winning-in-games-with-rolling-pair-of-dice.lesson>Math expectation of winning in games with rolling pair of dice</A> \r<BR>\n" );
document.write( "\n" );
document.write( "in this site.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "Learn the subject from there &nbsp;(&nbsp;!&nbsp;)\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );