Q2. A cost-plus-incentive-fee contract has the following characteristics: Target Cost = $1,000,000 Target Fee = $100,000 Benefit/Cost Sharing Ratio for cost overruns = 80% Client / 20% Contractor Benefit/Cost Sharing Ratio for cost underruns = 60% Client / 40% Contractor a. How much will the client pay if the actual cost of performing the work is $1,100,000? And how much will the contractor earn? b. How much will the client pay if the actual cost of performing the work is $900,000? And how much will the contractor earn?

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Q2.

A cost-plus-incentive-fee contract has the following characteristics:

Target Cost = $1,000,000

Target Fee = $100,000

Benefit/Cost Sharing Ratio for cost overruns = 80% Client / 20% Contractor

Benefit/Cost Sharing Ratio for cost underruns = 60% Client / 40% Contractor

a. How much will the client pay if the actual cost of performing the work is $1,100,000? And how much will the contractor earn?

b. How much will the client pay if the actual cost of performing the work is $900,000? And how much will the contractor earn?

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