ABC Company Enters into a Contract with Edmond Library to Help

question 61

Multiple Choice

ABC Company enters into a contract with Edmond Library to help them streamline their purchasing process.The contract specifies that Edmond Library will pay ABC $50,000 in the form of a fixed fee plus an additional $20,000 if the library achieves $200,000 in cost savings.ABC estimates a 55% chance that the library will achieve a $200,000 savings.Assuming ABC estimates that the transaction price is the expected value transaction price.The transaction price is recorded as ________.

• A)$50,000
• B)$61,000
• C)$70,000
• D)$75,000

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Definitions:

Quantity Minimized

Refers to the outcome of an optimization problem where the goal is to find the smallest possible value of a certain quantity.

Multiple Regression Model

A statistical technique that models the relationship between a dependent variable and multiple independent variables by fitting a linear equation to observed data.

Regression Slope Coefficients

The estimates that measure the relationship between the dependent variable and each independent variable in regression analysis.

Y-intercept

The point where a line, curve, or surface intersects the y-axis of a coordinate system.