Answered step by step
Verified Expert Solution
Question
1 Approved Answer
thank you! Kevin Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Colf Club. Concrete Always enters into a contract
thank you!
Kevin Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Colf Club. Concrete Always enters into a contract with Dakota to construct the path for $244,000. In addition, as part of the contract, a performance bonus of $48,800 wil be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-apon date. The performance bonus decreases by $12.200 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 isfairly confident that he will recelve agood portion of the performance bonus. Kevin estimates, given the constraints of his schedule related to other jobs, that there is 55 probablilty that he will complete the project on time, a 30n 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 Conerete Always should compute for this agreemient. Assume that Kevin Heun has reviewed his work sehedule and decided that it makes sense to completethis project on time. Assumine that he now believes that the probability for completing the project on time is 90% and otherwise it will be finished 1 week iate. determine the transaction price. Transaction price Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started