1 . Secure https/ Ch 5 Assessment Help Seve &Exit; Submit On April 1st, Bob the

Question

1 . Secure https/ Ch 5 Assessment Help Seve &Exit; Submit On April 1st, Bob the Builider entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $5,000 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn Nolan offered to pay an additional 30%of the base fee the project finished 2 weeks early and 10% the project finished a week early The probability of fine' 2. early is 30% and the probability of finishing a week early is 60% What is the expected transaction price with variable consideration estimated as the expected value Multiple Choice $5,750 5.500 4750

Explanation / Answer

$ 5,000

$ 1,500

($ 5000 * 30/100)

0.30 or 30%

$ 1,950

$ 5,000

$ 500

($ 5,000 * 10/100)

0.60 or 60%

$ 3,300

Base Fees (A) Incentive (B) Probablity (C) Expected Value (D = (A+B) * C)

$ 5,000

$ 1,500

($ 5000 * 30/100)

0.30 or 30%

$ 1,950

$ 5,000

$ 500

($ 5,000 * 10/100)

0.60 or 60%

$ 3,300

$ 5,000 - 0.10 or 10% $ 500 Expected Transaction Price with Variable consideration estimated as the expected Value $ 5,750

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.