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An oil company owns a lease on a potential prospect. can potentially drill two zones. Zone one is a shallow one and zone two is a deep one. of a well in zone one cost $70,000. The will probability of success is 0.4 and a successful well will result in Pv = $350,000. Drilling of zone two will cost $250,000. The probability of success is 0.2 and a successful well will result in PV of $2 million. Which option should the company choose? Draw the decision tree and use the decision tree analysis to calculate.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92185766

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