DrPrivacy,Inc

question 64

Essay

Dr.Privacy,Inc.specializes in shredding office documents and destroying computer hard drives for various clients in the U.S.In June 2016,it enters into a contract with the U.S.government to properly discard computer hard drives.The contract specifies a fixed fee of $50,000 for the first 25,000 hard drives,and an additional $5,000 for each incremental 10,000 drives.The company estimates a 65% chance of handling 25,000 drives or fewer,30% chance of handling more than 25,000 drives but fewer than 35,000 drives,and 5% chance of handling more than 35,000 drives but fewer than 45,000 drives.
Required: Assuming that the company determines transaction price as the expected value of the consideration,what is Dr.Privacy's estimate of the transaction price for this contract?

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Definitions:

Leading Strand

The strand of DNA that is continuously created during the process of DNA replication, following the direction of the replication fork.

Lagging Strand

In DNA replication, the strand that is synthesized discontinuously in short segments opposite the direction of replication fork movement.

Avery

Avery refers to Oswald Avery, a scientist known for demonstrating that DNA is the substance that causes bacterial transformation.

Hershey and Chase

Scientists who conducted experiments in 1952 proving that DNA, not protein, is the genetic material in bacteriophages.