Question
(0) Mark Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with
(0) Mark Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $212,000. In addition as part of the contract, a performance bonus of $42,400 will be paid based on the timing of completion the performance bonus will be paid fully if completed by the agreed-upon date the performance bonus increases by $10,600 per week for every week be on the agreed-upon completion date Mark has been involved in a number of contracts that have performance bonus as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Mark estimates, givrn the constraints of his schedule related to the other jobs that there is a 55% probability that he will complete the job on time, a 30% probability that he will be one week late and a 15% probability that he will be two weeks late. Assume that Mark Heun has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 90% and otherwise it will be finished 1 week late, determine the transaction price. Transaction Price:
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