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?
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?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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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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