# Quantitative report

#### kazu1

##### New Member
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.