Test land. If test is positive, drill. If test is negative, sell. Expected profit = $427,300.
Sell land
0.37 $650 $550
Positive
2 0.46
$0 $1,240 Oil
$3,400
$427.30 Sell land
-$50
0.63 $50 -$50
Negative
1 0.05
$0 -$50 Oil
0.2
Oil
$3,500
Problem 8-38