The Mobile Oil company has recently acquired oil rights to a new potential source of natural oil in Alaska. The current market value of these rights is $90,000 (Company can sell the project for $90,000). If there is natural oil at the site, it is estimated to be worth $800,000; however, the company would have to pay $100,000 in drilling costs to extract the oil. The company believes there is a 0.25 probability that the proposed drilling site actually would hit the natural oil reserve. Alternatively, the company can pay $30,000 to first carry out a seismic survey at the proposed drilling site. The probability of a favorable seismic survey is 60% and unfavorable seismic survey is 40%. If company under seismic favorable result decides to drill, probability of the hit oil is 80% and dry hole is 20%. But if seismic report is unfavorable, probability of hit oil is 10% and dry hole is 90 %. If seismic report came unfavorable, selling value of the project will drop from $90,000 to $50,000. If seismic report came favorable, selling value of the project will increase from $90,000 to $110,000.
a. Construct a decision tree for this problem.
b. What is the optimal decision strategy using the EMV criterion? Highlight all the branches for optimal solution.

Florence invested in a factory requiring. federally-mandated reductions in carbon emissions. how will this impact florence as the factory's owner? a. her factory will be worth less once the upgrades are complete. b. her factory will likely be bought by the epa. c. florence will have to invest a large amount of capital to update the factory for little financial gain. d. florence will have to invest a large amount of capital to update the factory for a large financial gain.

This exercise illustrates that poor quality can affect schedules and costs. a manufacturing process has 130 customer orders to fill. each order requires one component part that is purchased from a supplier. however, typically, 3% of the components are identified as defective, and the components can be assumed to be independent. (a) if the manufacturer stocks 130 components, what is the probability that the 130 orders can be filled without reordering components? (b) if the manufacturer stocks 132 components, what is the probability that the 130 orders can be filled without reordering components? (c) if the manufacturer stocks 135 components, what is the probability that the 130 orders can be filled without reordering components?

Nell and kirby are in the process of negotiating their divorce agreement. what should be the tax consequences to nell and kirby if the following, considered individually, became part of the agreement? a. in consideration for her one-half interest in their personal residence, kirby will transfer to nell stock with a value of $200,000 and $50,000 of cash. kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. they purchased the residence three years ago for $300,000.nell's basis for the stock is $ xkirby's basis in the house is $ xb. nell will receive $1,000 per month for 120 months. if she dies before receiving all 120 payments, the remaining payments will be made to her estate.the payments (qualify, do not qualify) as alimony and are (included in, excluded from) nell's gross income as they are received.c. nell is to have custody of their 12-year-old son, bobby. she is to receive $1,200 per month until bobby (1) dies or (2) attains age 21 (whichever occurs first). after either of these events occurs, nell will receive only $300 per month for the remainder of her life.$ x per month is alimony that is (included in, excluded from) nell's gross income, and the remaining $ x per month is considered (child support, property settlement) and is (nontaxable, taxable) to nell.