Mathematics, 21.06.2021 16:10, ProfS7160
Southern Gas Company (SGC) is preparing to make a bid for oil and gas leasing rights in a newly opened drilling area in the Gulf of Mexico. SGC is trying to decide whether to place a high bid of $16 million or a low bid of $7 million. SGC, expects to be bidding against its major competitor Western Gas Corporation (WGC) and predicts WGC to place a bid of $10 million with a probability of 0.4 or a bid of $6 million with probability 0.6. Geological data collected at the drilling site indicates a 0.15 probability of the reserves at the site being large, a 0.35 probability of being average, and a 0.5 probability of being unusable. A large or average reserve would most likely represent a net asset value of $120 million or $28 million, respectively, after all drilling and extraction costs are paid. The company that wins the bid will drill an exploration well at the site for a cost of $5 million.
a. Develop a decision tree for this problem.
b. What is the optimal decision according to the EMV criterion?
c. Create a strategy table showing how the optimal decision would change if the probability of the NGC bidding $10 million varies from 0% to 100% in steps of 10%.
d. Create a strategy table showing how the optimal decision would change if the net asset value of a large reserve varies from $100 million to $140 million in $5 million increments and the net asset value of an average reserve varies from $20 million to $36 million in increments of $2 million.
Answers: 2
Mathematics, 21.06.2019 16:00, isabellemaine
Martin likes to make flower bouquets that have 3 daffodils and 4 tulips per vase. a daffodil has a mass of d grams, a tulip has a mass of t grams, and the vase has a mass of u grams. the expression 5(3d + 4t + v) describes the mass of 5 bouquets. match each amount in the situation with the expression that represents it. situation expression number of bouquets mass of one bouquet mass of the tulips in one bouquet 4t mass of the daffodils in one bouquet 3d + 4t + v
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Mathematics, 21.06.2019 17:00, softball2895
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Southern Gas Company (SGC) is preparing to make a bid for oil and gas leasing rights in a newly open...
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