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mihalych1998 [28]
2 years ago
11

Pharoah Construction enters into a contract with a customer to build a warehouse for $870000 on March 30, 2021 with a performanc

e bonus of $50000 if the building is completed by July 31, 2021. The bonus is reduced by $10000 each week that completion is delayed. Pharoah commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2021 65% August 7, 2021 25% August 14, 2021 5% August 21, 2021 5% The transaction price for this transaction is
Business
1 answer:
gogolik [260]2 years ago
3 0

Answer:

$915,000

Explanation:

The computation of the transaction price based on the expected value approach is presented below:

The formula is

= (Building cost of warehouse + bonus) × probability percentage

Date                                 Calculation                              Amount

July 31, 2021         ($870,000+$50,000) × 0.65            $598,000

August 7, 2021 ($870,000+$40,000) × 0.25                 $227,500

August 14, 2021 ($870,000+$30,000) × 0.05               $45,000

August 21, 2021 ($870,000+$20,000) × 0.05               $44,500

Total                                                                                  $915,000

Since the bonus is reduced $10,000 each week so $10,000 is subtracted for every delayed week

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Answer:

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A.

1st: report to your card issuer 

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I hope that helps you out!!

Any more questions, please feel free to ask me and I will gladly help you out!!

~Zoey


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