A $7,250 home improvement contract uses the 10 percent or $1,000 rule. What maximum deposit is allowed?
Correct Answer
A) $725.
Ten percent of $7,250 is $725, which is less than $1,000, so the cap is $725.
Why This Is the Correct Answer
Ten percent of $7,250 is $725, which is less than $1,000, so the cap is $725.
Why the Other Options Are Wrong
Option B: $1,000.
$1,000 is the cap, but 10 percent ($725) is lower, and the lesser applies. The correct calculation is 7,250 x 0.10 = 725; lesser of 725 and 1,000 = 725.
Option C: $1,450.
$1,450 uses 20 percent of the price. The correct calculation is 7,250 x 0.10 = 725.
Option D: $6,525.
$6,525 is the remaining 90 percent, not the deposit. The correct calculation is 7,250 x 0.10 = 725.
Reference Hint
Study anchor (closed-book): memorize Down payment calculation from CSLB 2026 Law Book; CSLB Home Improvement Contracts / B&P Code Section 7159 home improvement contract requirements; know the rule or calculation trigger without relying on exam-room lookup.
Independent practice; verify any reference hint against the edition and category permitted for your booking. Official exam and reference-list sources →
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