Question: 4. On April 1, Maple Construction enters into a contract with a customer to build a warehouse for $1,000,000 Maple will receive $75,000 performance bonus
4. On April 1, Maple Construction enters into a contract with a customer to build a warehouse for $1,000,000 Maple will receive $75,000 performance bonus if the building is completed by September 1. The bonus is reduced by $25,000 each week that completion is delayed. Maple commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by September 1 September 8 September 15 After September 15 Probability 75% 15% 5 % L 5% A. What will be used as the contract price? B. Assume instead that Maple estimates a 60% probability of meeting the July 1 deadline and a 40% chance that the deadline will not be met. What will be used as the contract price
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