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GeekCo agrees to create a proprietary software application for BlockbusterInc. If the software is delivered on time, GeekCo will be paid $100,000. There is a
GeekCo agrees to create a proprietary software application for BlockbusterInc. If the software is delivered on time, GeekCo will be paid $100,000. There is a $10,000 penalty for each week that the software is delayed. GeekCo estimates that there is an 80% chance that the software will be delivered on time, a 15% chance it will be delivered one week late, and a 5% chance that it will be two weeks late. If GeekCo recognizes income using the expected value approach, how much revenue should GeekCo recognize?
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