Question
On April 1st, Coby the Constructor entered into a contract of one-month duration to build a storage room for Rudy. Coby is guaranteed to receive
On April 1st, Coby the Constructor entered into a contract of one-month duration to build a storage room for Rudy. Coby is guaranteed to receive a base fee of $5,000 for his services in addition to a bonus depending on when the project is completed. Rudy created incentives for Coby to finish the storage room as soon as he can without jeopardizing the structural integrity of the room. Rudy offered to pay an additional $1,000 if the project finished 2 weeks early and $500 if the project finished a week prly. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%.
What is the expected transaction price with variable consideration estimated as the most likely amount ?
A. $5000
B. $5500
C. 5750
D. 6000
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