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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Hello,
the numbers and information has been altered to avoid any violations.
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Sun Devil Corp. enters into a contract with a customer to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $150,000 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $50,000 each week that completion is delayed. Sun Devil commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
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Completed by:Â ProbabilityÂ
August 1 2018 70%
August 8, 2018 20%
August 15, 2018 5%
After Aug 15, 2018 5%
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Determine the Transaction Price for this contract using the Expected Value approach: $_____________
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