In a lump sum contract of $160,000 with 10% retainage, what should the final payment request be after 75% progress payments?

In a lump sum contract of $160,000 with 10% retainage, what should the final payment request be after 75% progress payments?

• A. Less than $50,000
• B. Exactly $50,000
• C. More than $50,000
• D. More than $60,000

Answer: (C)

In a lump sum contract, the total amount payable is fixed at $160,000. Retainage refers to a portion of the payment that is withheld until the project is complete, which in this case is 10% of the total contract amount. Initially, for progress payments, when 75% of the work has been completed, the contractor is eligible to receive 75% of the contract amount before accounting for retainage. This calculation would be 75% of $160,000, which equals $120,000. From this amount, the retainage must be deducted. The retainage is calculated as 10% of the total contract value, which amounts to $16,000. Therefore, the actual payment that the contractor can request after 75% of the work is completed would be $120,000 minus the retainage of $16,000. Thus, the payment request at this stage would be $120,000 - $16,000 = $104,000. Given that the question focuses on the context of final payment requests and progress payments, it is clear that the amount $104,000 is well above $50,000. Therefore, selecting an answer that states "more than $50,000"

In a lump sum contract, the total amount payable is fixed at $160,000. Retainage refers to a portion of the payment that is withheld until the project is complete, which in this case is 10% of the total contract amount.

Initially, for progress payments, when 75% of the work has been completed, the contractor is eligible to receive 75% of the contract amount before accounting for retainage. This calculation would be 75% of $160,000, which equals $120,000.

From this amount, the retainage must be deducted. The retainage is calculated as 10% of the total contract value, which amounts to $16,000. Therefore, the actual payment that the contractor can request after 75% of the work is completed would be $120,000 minus the retainage of $16,000. Thus, the payment request at this stage would be $120,000 - $16,000 = $104,000.

Given that the question focuses on the context of final payment requests and progress payments, it is clear that the amount $104,000 is well above $50,000. Therefore, selecting an answer that states "more than $50,000"