ABC Company enters a contract with Edmond Ubrary to help them streamilne their purchasing process. The contract specifies that Edmond Ubrary will pay ABC $$50,000$ in the form of a fixed fee plus an additional $$20,000$ if the library achleves $$200,000$ in cost savings. ABC estimates a $55\%$ chance that the library will achleve a $$200,000$ savings. Assuming ABC estimates that the transaction price is the expected value transaction price. The transaction price is recorded as $$

a$.$ $$50,000$

$$61,000$

c$.$ $$70,000$

d$.$ $$75,000$

Questions $2,3$ and $4$

Zhang Corporation enters a contract with Warner Video to add their programs to Zhang's network, Warner will pay Zhang an upfront flixed fee of $$250,000$ for $12$ months of access and will also pay a $$100,000$ bonus if Zhang's users access Warner Video for at least $10,000$ hours during the $12-$month period. Thang estimates that it has a $70\%$ chance of earning the $$100,000$ bonus.

$2.$ Refer to Zhang Corporation. Using the expected$-$value approach the transaction price would be $$

a$.$ $$200,000EV=100,000\mathrm{.}70=70,000$

b$.$ $$250,000$

$($c$)5320,009TP=250,000+70,000=320,000$

$8.$ $$350,000$