Edward Lee, president of Sunland Always, agrees to construct a concrete cart path at Novak Golf Club.
Sunland Always enters into a contract with Novak to construct the path for $237,000. In addition, as part of
the contract, a performance bonus of $38,000 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 $9,500 per week for every week beyond the agreed-upon completion date. Edward 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. Edward estimates,
given the constraints of his schedule related to other jobs, that there is 60% probability that he will complete
the project on time, a 30% probability that he will be 1 week late, and a 10% probability that he will be 2
weeks late.