Question

Nair Corp. enters into a contract with a customer to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $150,000 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $50,000 each week that completion is delayed. Nair commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

1.Completed by August 1, 2026: 70%
2.Completed by August 8, 2026: 20%
3.Completed by August 15, 2026: 5%
4.After August 15, 2026: 5%
What is the estimated probability that the building will be completed by August 1, 2026?
A) 30%
B) 50%
C) 70%
D) 90%

Answer 1

The estimated probability that Nair Corp. will complete the building by August 1, 2026, is 70%, according to the company's own estimations based on previous experience.

Step-by-step explanation:

The question asks us about the probability that Nair Corp. will complete the building by August 1, 2026. Given the information, Nair Corp. themselves estimate that there is a 70% likelihood of completing the construction by that date. No other calculation is required, as the company has provided their own estimation based on prior experience.