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need help on (b) please? Kenneth Garcia, president of Pharoah Always, agrees to construct a concrete cart path at Bloom Golf Club. Pharoah Always enters
need help on (b) please?
Kenneth Garcia, president of Pharoah Always, agrees to construct a concrete cart path at Bloom Golf Club. Pharoah Always enters into a contract with Bloom to construct the path for $199,000, In addition, as part of the contract, a performance bonus of $44,400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $11,100 per week for every week beyond the agreed-upon completion date. Kenneth 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, Kenneth estimates, given the constraints of his schedule related to other jobs, that there is 55% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 15% probability that he will be 2 weeks late. (a) Determine the transaction price that Pharoah Always should compute for this agrecment. Transaction price eTextbook and Media List of Accounts Attempts: 1 of 3 used (b) Assume that Kenneth Garcia has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 89% and otherwise it will be finished 1 week late, determine the transaction price. Transaction price
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