Problem V: Marle Construction enters into a contract with a customer to build a warehouse...
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Problem V: Marle Construction enters into a contract with a customer to build a warehouse for $900,000 on March 30, 2020 with a performance bonus of $60,000 if the building is completed by July 31, 2020. The bonus is reduced by $15,000 each week that completion is delayed. Marle commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2020 55% August 7, 2020 25% August 14, 2020 15% August 21, 2020 5% Calculate the transaction price using the expected value approach. Calculate the transaction price using the most likely approach
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