BOLICK Telecommunication Corporation agrees to sell CJP Company voice minutes over a period of one year. CJP Company promises to pay P 0.20 per minute for the first 100,000 minutes. If the minutes purchased exceeded 100,000 minutes, then the price falls to P 0.15 per minute for all minutes purchased. If the price exceeded 150,000 minutes, then the price falls to P 0.10 per minute for all purchased. In effecting the agreement, price shall be reduced retrospectively. Based on BOLICK’s experience with similar agreements, it estimates the following outcome: Less than 100,000 minutes 60% 100,000 up to 150,000 minutes 30% Exceeding 150,000 minutes 10% 1. What is the estimated transaction price under expected value method?
a). P 0.20 per minute
b). P 0.175 per minute
c). P 0.15 per minute
d). P 0.125 per minute
