Business
Business, 25.11.2021 08:20, jfarrar02

Nair Corp. enters into a contract to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $150,000 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is re-duced by $50,000 each week that completion is delayed. Nair commonly includes these completion bonuses in its contracts and based on prior experience, estimates there is 70% probability of completion by August 1, 20% probability of completion by August 8, 5% probability of completion by August 15, and 5% probability of completion after August 15. Using the Expected Value method, the contract price should be:

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Nair Corp. enters into a contract to build an apartment building for $1,000,000. The customer hopes...

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