PTA calculation
Submitted by chidambararaj1 on Tue, 07/23/2013 - 22:57
Guys pls help
A contractor has agreed to build a storage depot for a target price of $90,000, but there is some uncertainty involved in the project, so buyer & seller have agreed that the ceiling price will be $100,000. The buyer will pay 100% costs upto $80, 000 and 75% of costs between $80,000 & $100,000 but any cost over $100,000 is absorbed by the contractor. What is the point of total assumption for this contract for the buyer?
1. $100, 000
2. $90, 000
3. $87, 750.25
4. $93, 333.33
Ans: option 4.. how?
Forums:
vikula01
Tue, 07/23/2013 - 23:29
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option d
Target price = 90,000
Ceiling price = 100,000
As the builder said his ratio is 100 % for costs upto 80,000 that means
Cost price = 80000
After that buyer :seller ration = 75:25
So PTA = {( 100000-90000)/buyer's ratio }+ 80000 = 93333.33
let me know
chidambararaj1
Tue, 07/23/2013 - 23:45
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option d
if the buyer pays 100% of the cost upto $80, 000 then buyer ratio will be 80% to the ceiling price right. How come 75%. Please explain.
th9063
Wed, 07/24/2013 - 03:34
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Option D ?
The buyer agreed to pay 100% up to 80,000 so the buyer and seller agreed to the target cost will be 80,000 which is a 75:25 (?)