Lang Construction signed a contract to build an apartment co…

Questions

Lаng Cоnstructiоn signed а cоntrаct to build an apartment complex for $8,000,000. An additional performance bonus of $250,000 will be paid if the project is completed on time. The performance Bonus decreases by $50,000 a week for every week beyond the completion date. Lang Construction estimates that there is a 65% chance they complete the project on time, a 20% chance they will complete the project 1 week late and a 15% chance they complete the project 2 weeks late.  What is the transaction price under the (1) Expected Value method and under the (2) Most Likely Outcome method?

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