The Operations Manager for a Well-Drilling Company Must Recommend Whether

question 9

Multiple Choice

The operations manager for a well-drilling company must recommend whether to build a new facility,expand his existing one,or do nothing.He estimates that long-run profits (in $000) will vary with the amount of precipitation (rainfall) as follows: If he feels the chances of low,normal,and high precipitation are 30%,20%,and 50%,respectively,what is his expected value of perfect information?

• A)$140,000
• B)$170,000
• C)$285,000
• D)$305,000
• E)$475,000

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Definitions:

Economic Events

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Mass Base

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