please not that a price is referred to the amount will be payed by the buyer while the cost is referred to the amount will be payed by a seller. in another word the price is how much a buyer will pay to buy the service/ product/ result while the cost is how much the it will be costed by the seller
the target price for the given information is the sum of the target cost plus the target fee i.e 1000000 +100,000 =1,100,00 then the equation will be applicable as follow
PTA ={ (ceiling price - target price) /buyer ratio} + target cost
PTA=( 1,200,000 - 1,100,000)/0.8 +1000,000
{100,000/0.8} + 1000,000 = 1,125,000
In a project, a cost incentive contract has been awarded to a contractor with the following parameters:
Target cost: $1,000,000
Target contractor fee: $100,000
Cost benefit sharing ratio: 80% / 20%
Price ceiling: 1,200,000
What is the point of total assumption (PTA, breakpoint) of the project?
o $1,000,000
o $1,100,000
o $1,125,000
o $1,200,000
Can someone explain to me why C is the correct choice? Thanks in advance!
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