Submit an Excel workbook with your Precision Tree model and analysis.44. The senior executives of an oil company are trying to decide whether to drill for oil in a particular field in the Gulf of...

Submit an Excel workbook with your Precision Tree model and analysis.

44. The senior executives of an oil company are trying to decide whether to drill for oil in a particular field in the Gulf of Mexico. It costs the company $600,000 to drill in the selected field. Company executives believe that if oil is found in this field its estimated value will be $3,400,000. At present, this oil company believes that there is a 45% chance that the selected field actually contains oil. Before drilling, the company can hire a geologist at a cost of $55,000 to perform seismographic tests. Based on similar tests in other fields, the tests have a 25% false negative rate (no oil predicted when oil is present) and a 15% false positive rate (oil predicted when no oil is present).

a. Assuming that this oil company wants to maximize its expected net earnings, use a decision tree to determine its optimal strategy.