19) A

To solve this question, we need to use the following method:

Drilling:

Small strike (probability = 0.1) will lead to a loss of (-800,000 + 80,000 = -720,000)

Medium strike (probability = 0.8) will lead to a profit of (1,200,000 – 800,000 = 400,000)

Big strike (probability = 0.1) will lead to a profit of = (4,600,000 – 800,000 = 3,800,000)

Sum of possibilities = (-720,000 x 0.1) + (400,000 x 0.8) + (3,800,000 x 0.1) = $628,000

Not drilling:

No sale (probability = 0.2) will lead to no profit or no loss

small sale (probability = 0.6) will lead to a profit of (500,000 – 0 = 500,000)

Big sale (probability = 0.2) will lead to a profit of = (1,000,000 – 0 = 1,000,000)

Sum of possibilities = (0 x 0.2) + (500,000 x 0.6) + (1,000,000 x 0.2) = $500,000

Hence the probability of making a profit is larger when drilling is done.