Chandler Bing Group Inc. (CBG) is a global leader in marketing communications. The company provides brand and digital advertising services to its clients. CBGs advertising contracts include a fixed fee plus the possibility of additional compensation that is designed to link a portion of the revenue to CBGs performance in delivering its services. A contract recently signed by a customer specifies that CBG will receive an upfront fixed fee of $1,000,000 plus an additional $250,000 if the clients sales increase by more than 10% following the digital advertising campaign created by CBG. CBG estimates a 75% chance that the clients sales will increase by more than 10% as a result of the advertising campaign. Assuming that the company uses the expected-value approach, what is the amount of revenue CBG will record for this contract?

A.

$1,062,500

B.

$1,250,000

C.

$1,187,500

D.

$1,000,000