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Thread: Quantitative report

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    Quantitative report




    Am stuck with on the following question, anyone that can please help.

    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.

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    Re: Quantitative report

    Homework policy here: http://www.talkstats.com/showthread....ho-show-effort

    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?

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    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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