A Tennessee residential contractor wants to increase their monetary limit from $100,000 to $500,000. What additional net worth must be demonstrated?
Correct Answer
C) $25,000
Moving from Class 1 ($100,000 limit) requiring $25,000 net worth to Class 2 ($500,000 limit) requiring $50,000 net worth means an additional $25,000 is needed.
Why This Is the Correct Answer
Moving from a Class 1 license ($100,000 monetary limit, requiring $25,000 net worth) to a Class 2 license ($500,000 monetary limit, requiring $50,000 net worth) means the contractor must demonstrate an additional $25,000 in net worth — the difference between the two thresholds.
Why the Other Options Are Wrong
Option A: $50,000
$50,000 is incorrect — that is the total net worth required for a Class 2 license, not the additional amount needed on top of the Class 1 requirement of $25,000.
Option B: $35,000
$35,000 is incorrect — this figure does not correspond to any Tennessee licensing net worth tier or increment. It is a distractor with no basis in the classification schedule.
Option D: $15,000
$15,000 is incorrect — this amount is too low and does not represent the difference between any adjacent Tennessee contractor license class net worth requirements.
Memory Technique
Think of climbing a ladder: Class 1 rung = $25K, Class 2 rung = $50K. The step between them is $25K — and that is exactly what you must add to climb up.
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