Can someone help me to get the PTA for this question

Submitted by Binay Anand on Tue, 06/10/2014 - 04:44

Target cost:$1,000,000Target contractor fee:$100,000Cost benefit sharing ratio:80%/20%Price ceiling: $1,200,000

In a project, a cost incentive contract has been awarded to a contractor with the following parameters: What is the point of total assumption (PTA, breakpoint) of the project?46
o $1,000,000
o $1,100,000
o $1,125,000
o $1,200,000

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chullan88

Tue, 06/10/2014 - 05:59

3rd option
1,125,000

Target Price = Target Cost + Target Fee
T.P = 1000000+100000 = 1100000

PTA = [(Ceiling Price - Target Price)/Buyer's Share Ratio]+Target Price

PTA = (100000/.8)+1000000 = 1125000

Hope it is clear