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♦ Click on “Node / Add Chance” in the pull down menu.<br />
♦ Choose “Year2 Price”<br />
♦ Attach this chance node to the upper branch of the “Drill Decision” node<br />
♦ Separate the Year 1 and Year 2 production. Double-Click on the “Yes” branch<br />
of<br />
the “Drill Decision” node. The Get/Pay menu pops up.<br />
♦ Change the formula there to: -2000+500*(18-13)<br />
♦ Click OK<br />
♦ Click on any<br />
branch of the “Year2_Price” node. The Get/Pay menu pops up.<br />
♦ Input the Year 2 cash flow formula: 500*(Year2_Price – 13). You can use the<br />
Variable Icon button in the Get/Pay menu to input the Year2 Price variable<br />
instead of typing it in.<br />
At<br />
this point, your screen should look like Figure 6:<br />
Figure 6<br />
After running the analysis, the policy tree shown in Figure 7:<br />
Drill_Decision<br />
[2400]<br />
Year2_Price<br />
Yes<br />
[2400]<br />
500<br />
No [0]<br />
Figure 7<br />
5
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