A contractor's annual revenue is $850,000. What is the required surety bond amount in Alabama?
Correct Answer
A) $15,000
For contractors with annual revenue between $500,000 and $1,000,000, Alabama requires a $15,000 surety bond.
Why This Is the Correct Answer
Alabama uses a tiered surety bond schedule based on annual revenue. Contractors with revenue between $500,000 and $1,000,000 fall into the mid-tier bracket and must maintain a $15,000 surety bond. $850,000 is squarely in this range.
Why the Other Options Are Wrong
Option B: $20,000
$20,000 corresponds to a higher revenue bracket (over $1,000,000). Since $850,000 is below that threshold, the $20,000 requirement does not apply.
Option C: $10,000
$10,000 is the bond required for contractors with lower annual revenues (below $500,000). Since this contractor's revenue exceeds $500,000, this amount is insufficient.
Option D: $25,000
$25,000 is not a standard tier in Alabama's bond schedule for this revenue range. It may be confused with higher-value project bond requirements in other states.
Memory Technique
Picture a revenue ladder: below $500K = $10K bond, $500K–$1M = $15K bond, above $1M = $20K bond. Each rung goes up by $5,000 as revenue doubles.
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