You have mineral rights on a piece of land that you believe may
have oil underground. There is only a 10% chance that you will
strike oil if you drill, but the payoff is $200,000. It costs
$10,000 to drill. The alternative is not to drill at all, in which
case your profit is zero.
(c) Draw a decision tree to represent your problem. Should you
drill?
(d) Use the decision tree to calculate EVPI.
(e) Before you drill you...