題組內容

[題組三25%](每題5分)
 A rare earth metals drilling company in Norh America must decide whether or not to engage in a new drillingactivity before regulators pass a law that bans drilling 
at that site. The cost of drilling is $1,000,000. After drilling is completed and
 the drilling costs are incurred, the company will learn whether or not there are rare earth metals. If there are rare earth metals, operating profits generated are estimated at $4,000,000. If there are no rare carth metals, there will be no future profits.

2.The company estimates that p = 0.6. What is the expected value of drilling? Should the company go ahead and drill?