A contractor submits a progress payment application for $75,000. The contract specifies a 10% retainage. If this is the final payment and half of the retained amount is released, what is the total payment amount?
Correct Answer
B) $71,250
Current payment after retainage: $75,000 × 90% = $67,500. Previously retained amount: $75,000 × 10% = $7,500. Half released: $7,500 ÷ 2 = $3,750. Total payment: $67,500 + $3,750 = $71,250.
Why This Is the Correct Answer
Option B correctly calculates the total payment by first determining the current payment after 10% retainage ($67,500), then adding half of the previously retained amount ($3,750). The final payment includes both the net current payment and the partial release of accumulated retainage. This reflects standard construction payment practices where final payments often include retainage releases.
Why the Other Options Are Wrong
Option A: $75,000
This represents the full gross payment amount without any retainage deduction, which would only occur if 100% of retainage was released and no current retainage was withheld.
Option D: $67,500
This amount exceeds the original payment application and would only be possible if more than the full retained amount was released, which contradicts the problem stating only half is released.
Memory Technique
Remember 'CPR': Current Payment + Retainage Release = Total payment. Current gets the retainage deduction, then add back any retainage release.
Reference Hint
Florida Building Code - Chapter 713 (Construction Liens) and AIA Contract Documents regarding payment and retainage provisions
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