As consideration, the government pays the operator $80,000,000 per year in years 3-10. FFC makes the following
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Question:
As consideration, the government pays the operator $80,000,000 per year in years 3-10. FFC makes the following estimates at contract inception.
Construction Services for years 1 & 2 with a contract costs of $50 and Stand-alone selling price at forecast cost+20%
Operation Services for years 3-10 with a contract costs of $20 and Stand-alone selling price at forecast cost+40%
Reconditioning for year 9 with a contract costs of $10 and Stand-Alone Selling price at forecast cost+10%
All cash flows are assumed to take place at the end of the year. FFC determines that the implied interest rate in the contract is 33.05%
How much Service Revenue is recognized in years 2 & 5?
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