Indigo A.G. enters into a contract with a customer to build an apartment building for €1,031,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of €144,300 to be paid if the building is ready for rental beginning August 1, 2023. The bonus is reduced by €48,100 each week that completion is delayed. Indigo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2023 August 8, 2023 August 15, 2023 After August 15, 2023 Probability 70 % 20 4 (a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether or not the building can be completed by August 1, 2023, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1, alde blonk
Indigo A.G. enters into a contract with a customer to build an apartment building for €1,031,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of €144,300 to be paid if the building is ready for rental beginning August 1, 2023. The bonus is reduced by €48,100 each week that completion is delayed. Indigo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2023 August 8, 2023 August 15, 2023 After August 15, 2023 Probability 70 % 20 4 (a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether or not the building can be completed by August 1, 2023, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1, alde blonk
Chapter12: Sequences, Series And Binomial Theorem
Section12.3: Geometric Sequences And Series
Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...
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Transcribed Image Text:Indigo A.G. enters into a contract with a customer to build an apartment building for €1,031,300. The customer hopes to rent
apartments at the beginning of the school year and provides a performance bonus of €144,300 to be paid if the building is ready for
rental beginning August 1, 2023. The bonus is reduced by €48,100 each week that completion is delayed. Indigo commonly includes
these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by
August 1, 2023
August 8, 2023
August 15, 2023
After August 15, 2023
Probability
70 %
20
4
(a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether or not the building can be
completed by August 1, 2023, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1,
10. Do not leave any fields blank I
Transcribed Image Text:(a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether or not the building can be
completed by August 1, 2023, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1.
2023). (If answer is 0. please enter O. Do not leave any fields blank.)
Transaction Price
€
1175600
(b) Determine the transaction price for the contract, assuming Indigo has limited information with which to develop a reliable estimate
of completion by the August 1, 2023, deadline.
Transaction Price €
822920
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