1. ## Quantitative report

An oil company is considering whether or not to bid for an offshore &Wing contract. The bid would cost \$60m with a 65% chance of gaining the contract. The company may set up a new drilling operation or move its already existing operation, which has proved successful, to a new site. The probability of success and expected returns are as follows:

New Operation Move Existing Operation
Outcome Probability Expected Return (\$m) Probability Expected Return (\$m)
Success 0.7 80 0.8 70
Failure 0.3 20 0.2 30
Should company not bid or be unsuccessful in its bid, they can use the \$60m to modernize their operations. This would result in a return of either 5% or 10% on the sum invested with probabilities 0.4 and 0.6 respectively.

With the aid of decision tree prepare a quantitative report advising the company on the optimal course of action.

2. ## Re: Quantitative report

Also... this isn't really a statistics question. It's a finance question. I guess anyone reasonably numerically literate could solve it, but maybe using a finance forum might be wise?

3. ## Re: Quantitative report

Am sorry I had not read the assignment policy and guidelines, please find attached what I have done. Thank you.

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