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The facts in the case are unchanged, except instead of having Penny work on pro bono projects if no work is available, she is furloughed.
The facts in the case are unchanged, except instead of having Penny work on pro bono projects if no work is available, she is furloughed. Furloughed workers are paid 60% of their normal wage but are not required to come to work.
What is the indifference bid on the waterfall project, that is, at what bid is Escher indifferent between having the offer accepted and having the bid be rejected?
M. C. Escher is the owner of Escher Architecture. Architects make $60 per hour when working. Escher employs two architects, Sheldon and Penny. Each has 100 hours of time that is not committed to billable projects in the coming month. A prospective client wants Escher's help in designing a new waterfall that will generate 100 billable hours for each of the two architects. There is a 25% probability that Escher will find another project for which the two architects could be used to generate 100 billable hours each, for which Escher can charge the normal rate of $150 per hour. The new project cannot be deferred to a future period, so if Escher accepts the waterfall project, the new project could not be accepted If Escher does not get the waterfall project and does not find a new project, Sheldorn would do the work of a clerical worker. Clerical workers make $16 per hour and can be fired at will. Penny would perform pro bono work for local charitable organizations Escher believes that these activities generate goodwill and name recognition for Escher Architecture that is worth $19 per hour to the firm. Sheldon and Penny will each be paid $60 per hour regardless of the tasks they perform. M. C. Escher is the owner of Escher Architecture. Architects make $60 per hour when working. Escher employs two architects, Sheldon and Penny. Each has 100 hours of time that is not committed to billable projects in the coming month. A prospective client wants Escher's help in designing a new waterfall that will generate 100 billable hours for each of the two architects. There is a 25% probability that Escher will find another project for which the two architects could be used to generate 100 billable hours each, for which Escher can charge the normal rate of $150 per hour. The new project cannot be deferred to a future period, so if Escher accepts the waterfall project, the new project could not be accepted If Escher does not get the waterfall project and does not find a new project, Sheldorn would do the work of a clerical worker. Clerical workers make $16 per hour and can be fired at will. Penny would perform pro bono work for local charitable organizations Escher believes that these activities generate goodwill and name recognition for Escher Architecture that is worth $19 per hour to the firm. Sheldon and Penny will each be paid $60 per hour regardless of the tasks they performStep by Step Solution
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