286 Unit 7 Critical reasoning: Advanced Level
A rival company called Ygen has bid
$10 million for the extraction rights.
Calculate the new probable returns, using
a decision tree if it assists you. Then decide
which of the following can most reliably be
inferred from the data.A On economic grounds alone Zenergies
should accept Ygen’s bid.
B On economic grounds alone Zenergies
should decline Ygen’s bid and go ahead
with extraction.
C It makes no difference economically
which decision is taken by Zenergies.
Answers and comments are on page 341.Suppose a new team of analysts have
reassessed the shale gas deposit in the light
of fresh evidence and improved technology.
The cost of extraction remains the same, but
the team now estimates that there is:• no danger of a Level C result ($2m return)
• only a 30% probability of a Level B result
($7m return)
• a 40% probability of a Level A result
($12m return)
• a 25% chance of a Level AA result
($24m return)
• a 5% chance of a Level AAA result
($40m return).End-of-chapter assignment