Question

If a contractor had an original contract price of $100,000 and had already expended $210,000 in part performance, estimates that the cost of completion would be $625,000, and has already received $175,000 in progress payment, how much would the contractor be entitled to in damages if you were to use the reasonable cost of completion formula?

a) $400,000
b) $500,000
c) $625,000
d) $825,000

Answer 1

The contractor would be entitled to $415,000 in damages.

Step-by-step explanation:

To determine the amount the contractor would be entitled to in damages using the reasonable cost of completion formula, we need to subtract the amount already expended from the estimated cost of completion. The formula is:

Amount of damages = Cost of completion - Expenditure

Plugging in the values given in the question:

Amount of damages = $625,000 - $210,000 = $415,000

Therefore, the contractor would be entitled to $415,000 in damages.