Granval is building a warehouse for a fixed price of 500,000. It will receive a bonus of 50,000 if the building is accepted before 30 June 20X2, and no bonus otherwise. Granval assesses the probability of meeting the deadline at 80%, uses the most likely amount and has concluded that it is highly probable that including the bonus will not result in a significant reversal of cumulative revenue (given judgements). Compute the transaction price.
- Fixed price
- 500,000
- Completion bonus
- 50,000
- Probability of meeting the deadline
- 80 %