The Operations Manager for a Well-Drilling Company Must Recommend Whether

Multiple Choice

The operations manager for a well-drilling company must recommend whether to build a new facility, expand his existing one, or do nothing. He estimates that long-run profits (in $000) will vary with the amount of precipitation (rainfall) as follows: $$\begin{array} { | l | l | l | l | } \hline { \text { ALTERNATIVE } } & { \text { PRECIPITATION } } \\\hline& \text { LOW } & \text { NORMAL } & \text { HIGH } \\\hline \text { Do Nothing } & - 100 & 100 & 300 \\\hline \text { Expand } & 350 & 500 & 200 \\\hline \text { Build New } & 750 & 300 & 0 \\\hline\end{array}$$ If he feels the chances of low, normal, and high precipitation are 30 percent, 20 percent, and 50 percent respectively, what are expected long-run profits for the alternative he will select?

A) $140,000
B) $170,000
C) $285,000
D) $305,000
E) $475,000