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Kevin Allen, president of Wildhorse Always, agrees to construct a concrete cart path at Indigo Golf Club. Wildhorse Always enters into a contract with Indigo
Kevin Allen, president of Wildhorse Always, agrees to construct a concrete cart path at Indigo Golf Club. Wildhorse Always enters into a contract with Indigo to construct the path for $223,000. In addition, as part of the contract, a perfarmance bonus of $34,400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upan date. The performance borus decreases by $8,600 per week for every week beyond the agreed-upon completion date. Kevin has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Kevin estimates, given the constraints af his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 20% probability that he will be 2 weeks late. (a) Determine the transaction price that Wildhorse Always should compute for this agreement. Transaction price $ eTextbook and Media
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