|Posted: 25 Jun 2008 at 18:33 | IP Logged
I wouldn't get too hung up on the "average date" part. The question says that they sold contracts evenly throughout 1992. Basically, you just have to understand that since the contracts were sold throughout the year, not just all at January 1, that not all of them have been outstanding for a year, so they haven't yet earned the full 40% of the revenue.
Think about it - a contract sold on Jan 1 would have earned the full 40% of revenue, a contract sold on Dec 31 would not have earned any revenue, and a contract sold on July 1 would have earned 1/2, or 20%, of the revenue. On average 20% of the revenue has been earned on all of the contracts.
I know that's a long response, but hopefully it makes sense :)
AUD (5/28) - 98