How much should it be capitalized Assume Buyer Corp. agrees to pay Seller Corp. a one$-$time payment two years from now

equaling $10\%$ of their EBITDA if it exceeds or meets $$10\mathrm{.}0M$ and nothing if does not exceed

$$10\mathrm{.}0M.$ Assume the following probabilities for potential outcomes:

EBITDA$($$M$).$ Probability.

$12,30\%$

$15,40\%$

$175$

$20,0\%$

If we further assume that a scenarios approach with a single discount rate of $7\%$ is used in

valuing the contingent consideration, how much should it be capitalized for immediately

subsequent to the acquisition? $($Accounting for some rounding may be necessary$)$

$$0$

$$912,743$

$$976,636$

$$1,045,000$

$$5,590,008$