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Gary Smith, president of Cullumber Always, agrees to construct a concrete cart path at Ivanhoe Golf Club. Cullumber Always enters into a contract with Ivanhoe to construct the path for $195,000. In addition, as part of the contract, a performance bonus of $44,000 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $11,000 per week for every week beyond the agreed-upon completion date. Gary has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus, Gary estimates, given the constraints of his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 20% probability that he will be 2 weeks late. (a) Determine the transaction price that Cullumber Always should compute for this agreement. Assume that Gary Smith has reviewed his work schedule and decided that it makes sense to complete this project on time. Assuming that he now believes that the probability for completing the project on time is 83% and otherwise it will be finished 1 week late, determine the transaction price. Transaction price

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