Required information SB Problem The following information applies to the questio

Question

Required information SB Problem The following information applies to the questions displayed below. st to receive a base fee of $5,200 for his services in addition to a bonus depending on when the project is completed Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 25% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 25% and the probability of finishing a week early is 55%. MC Qu. 121 What is the expected transaction price with variable... What is the expected transaction price with variable consideration estimated as the most likely amount?

Explanation / Answer

The liklihood that the job is finished a week early is 60%, in this case it is more likely that Bob would be paid the bonus than to not receive the bonus. The total expected amount is

$5200 + + (10% * $5200) = $5720

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