Test land. If test is positive, drill. If test is negative, sell. Expected profit = $565,000.
Sell land
0.3 $650 $550
Positive
2 0.65
$0 $2,000 Oil
$3,400
0.7 $50 -$50
Negative
1 0.05
$0 -$50 Oil
0.2
Oil
$3,500
Problem 8-37