Question
SHOW ALL WORK Waterways Corp enters a contract with a customer to build a yacht for $150,00 with a performance bonus of $100,000 that will
SHOW ALL WORK
Waterways Corp enters a contract with a customer to build a yacht for $150,00 with a performance bonus of $100,000 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 5% per week for every week beyond the agreed-upon completion date. The contract requirements are similar to contracts that waterways have performed previously, and management believes that such experience is predictive for this contract. Management estimates that there is a 60% probability that the contract will be completed by the agreed-upon completion date, a 25% probability that it will be completed 1 week late, and a 15% probability that it will be completed 2 weeks late. Calculate the consideration using the expected value method?
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