Algebra Last question for tonight

An oil-drilling company knows that it costs $25,000 to sink a test well. If oil is hit, the income for the drilling company will be $395,000. If only natural gas is hit, the income will be $125,000. If nothing is hit, there will be no income. If the probability of hitting oil is 1/40 and if the probability of hitting gas is 1/20, what is the expectation for the drilling company?

  1. 👍 0
  2. 👎 0
  3. 👁 202
  1. just multiply each event by its probability. The sum is the expected value of income. Then subtract the costs involved:

    (395000)(1/40)+(125000)(1/20)-25000

    Technically, we need all the probabilities to add to 1, so we should include the term for a dry well:

    (0)(37/40)

    but that adds nothing to the result.

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. history

    which describes the most accurate reason why oil wealth affects the stability of the middle east? a. wealthier middle eastern countries are able to use their oil profits to fund armies for self-defense. b. middle eastern nations

    asked by vanessa on July 11, 2019
  2. history

    Which describes the relationship between oil-producing Middle Eastern nations and the consumer states that consume their petroleum? Consumer states often are dependent on Mideast oil producers, but potential ties to terrorist

    asked by dianni on December 12, 2018
  3. Math

    Jason inherited a piece of land from his great-uncle. Owners in the area claim that there is a 45% chance that the land has oil. Jason decides to test the land for oil. He buys a kit that claims to have an 80% accuracy rate of

    asked by anaonymous on April 25, 2016
  4. History

    Which describes the relationship between oil-producing Middle Eastern nations and the consumer states that consume their petroleum? Oil-producing nations realize their economic interdependence with the consumer states and work

    asked by Kiara on February 20, 2019
  1. SOCIAL STUDIES

    WHICH OF THE FOLLOWING STATEMENTS SUPPORTED BY THE INFORMATION IN THE MAP 1] AUSTRASLIA IS SELF-SUPPORTING IN OIL.2]AFRICA TRADES OIL ONLY WITH SOUTH AMRICA.3] THE SOVIET UNION HAS TRADE ROUTES WITH EVERY MAJOR CONTINENT.4] ALL OF

    asked by stephanie on November 14, 2012
  2. Physics

    1. A cylindrical disk of wood weighing 45.0N and having a diameter of 30.0 cm floats on a cylinder of oil of density 0.850 g/cm3. The cylinder of oil is 75.0 cm deep and has the same diameter of the wood. (a) What is the gauge

    asked by Francis on April 24, 2017
  3. Math

    A Texas oil drilling company has determined that it costs $25,000 to sink a test well. If oil is hit, the revenue for the company will be $500,000. If natural gas is found, the revenue will be $150,000. If the probability of

    asked by Karen on August 2, 2017
  4. Business Finance

    Mobile Oil Company accepted a $10,000, 120 day note, dated March 3, at 8.5% to settle a past due accounts receivable. Mobile Oil discounted the note to raise cash on May 10 at a discounted rate of 9%. What proceeds did Mobile Oil

    asked by Terry on February 2, 2012
  1. business and finance

    Mobilee Oil Company accepted a $10,000, 120-day note, dated March 3, at 8.5% to settle a past due accounts receivable. Mobilee Oil discounted the note to raise cash on May 10 at a discounted rate of 9%. What proceeds did Mobilee

    asked by maria on August 13, 2012
  2. History

    Which describes the relationship between oil-producing Middle Eastern nations and the consumer states that consume their petroleum? A. The oil-producing nations wield absolute power over their overseas oil consumers, who have no

    asked by Sergio on February 15, 2019
  3. algebra/please help I have been wrong twice

    An oil-drilling company knows that it costs $25,000 to sink a test well. If oil is hit, the income for the drilling company will be $395,000. If only natural gas is hit, the income will be $125,000. If nothing is hit, there will

    asked by Mary Ann on May 28, 2014
  4. science

    from the point of view of an enviromentalist,what is probably the most significant argument against offshore drilling for oil? a)coal is preferable resource to oil. b)oil corporations are falsely advertising an oil shortage in

    asked by JESSICA on March 8, 2008

You can view more similar questions or ask a new question.