ABC Co. enters into a contract to construct a state-of-the-art manufacturing facility for XYZ Co.

• The contract price is $100 million plus a $5 million award fee if the facility is completed by a specified date.
• The contract is expected to take two years to complete.
• ABC will receive none of the $5 million fee if the facility is not completed by the specified date.
• ABC believes, based on its experience, that it is 95% likely that the contract will be completed successfully and in advance of the target date.

Using the most likely amount method, what is the transaction price at contract inception?

a. $105 million

b. $104.75 million

c. $100 million

d. $5 million