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William Corp. enters into a contract with a customer to build an apartment building for $1,056,300. The customer hopes to rent apartments at the
William Corp. enters into a contract with a customer to build an apartment building for $1,056,300. The customer hopes to rent apartments at the beginning of the school year and provides performance bonus of $136,200 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $45,400 each week that completion is delayed. William commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 Probability 70 % August 8, 2026 20 August 15, 2026 After August 15, 2026 2255 (a) Determine the transaction price for the contract, assuming William is only able to estimate whether the building can be completed by August 1, 2026, or not (William estimates that there is a 70% chance that the building will be completed by August 1, 2026). Transaction price $ (b) Determine the transaction price for the contract, assuming William has limited information with which to develop a reliable estimate of completion by the August 1, 2026, deadline. Transaction price $
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