Hi,

The following is the question:

A buyer has standard profit percentages that it offers its sellers for each type of contract. If Cost Plus Percentage of cost contract has 6% profit margin and a firm fixed price contract has  a 12% profit margin, then the target profit margin on a cost plus incentive fee contract might be ---

Options given are 4%, 8%, 12%, 15%

Answer is given as 8% 

How is 8% arrived at??