In a lump sum contract with a total price of $160,000, 10% retainage, and progress payments for 75% of the project, the final payment amount (including release of retainage) should be approximately how much?

In a lump sum contract with a total price of $160,000, 10% retainage, and progress payments for 75% of the project, the final payment amount (including release of retainage) should be approximately how much?

• A. 56,000
• B. 40,000
• C. 120,000
• D. 160,000

Answer: (A)

In a lump-sum contract, retainage is held back from progress payments and is released when the project is finished. The final payment should cover the value of the remaining work plus the retainage that has been withheld. Here, the total contract price is 160,000, so the remaining work at 75% completion is 25% of the price, which is 40,000. The retainage is 10% of the total contract price, which is 16,000, and this amount is released at final settlement. Add the two together to get the final payment: 40,000 + 16,000 = 56,000.

In a lump-sum contract, retainage is held back from progress payments and is released when the project is finished. The final payment should cover the value of the remaining work plus the retainage that has been withheld.

Here, the total contract price is 160,000, so the remaining work at 75% completion is 25% of the price, which is 40,000. The retainage is 10% of the total contract price, which is 16,000, and this amount is released at final settlement. Add the two together to get the final payment: 40,000 + 16,000 = 56,000.