An oil company purchased an option on land in Alaska. Preliminary geologic studies assigned the following prior probabilities.

P(High-quality oil) = 0.4

P(Medium-quality oil) = 0.4

P(No-oil) = 0.2

a. What is the probability of finding oil (to 1 decimal)?

b. After feet of drilling on the first well, a soil test is taken. The probabilities of finding the particular type of soil identified by the test are given below.

P(soil | High-quality oil)= 0.3

P(soil | Meduim-quality oil) = 0.5

P(soil | No-oil) = 0.2

Given the soil found in the test, use Bayes' theorem to compute the following revised probabilities (to 4 decimals).

What is the new probability of finding oil (to 4 decimals)?

According to the revised probabilities, what is the quality of oil that is most likely to be found?

- Select your answer -High quality Medium quality No oilItem

Suppose that a major city’s main thoroughfare, which is also an interstate highway, will be completely closed to traffic for two years, from january 2014 to december 2015, for reconstruction at a cost of $535 million. if the construction company were to keep the highway open for traffic during construction, the highway reconstruction project would take much longer and be more expensive. suppose that construction would take four years if the highway were kept open, at a total cost of $800 million. the state department of transportation had to make its decision in 2014, one year before the start of construction (so that the first payment was one year away). so the department of transportation had the following choices: (i) close the highway during construction, at an annual cost of $267.5 million per year for two years. (ii) keep the highway open during construction, at an annual cost of $200 million per year for four years. now suppose the interest rate is 80%. calculate the present value of the costs incurred under each plan.