Calculate the required bond amount for a Virginia Class A contractor with average annual gross receipts of $2,800,000 over the past three years.
Correct Answer
B) $100,000
Virginia requires Class A contractors with annual receipts over $2.5 million to post a $100,000 bond, compared to $50,000 for those under $2.5 million.
Why This Is the Correct Answer
Virginia law requires Class A contractors with average annual gross receipts exceeding $2.5 million over the past three years to maintain a $100,000 surety bond. Since this contractor has $2,800,000 in average annual receipts, which exceeds the $2.5 million threshold, they must post the higher bond amount of $100,000 rather than the standard $50,000 bond required for contractors below this threshold.
Why the Other Options Are Wrong
Option A: $50,000
$50,000 is the bond amount required for Class A contractors with average annual gross receipts of $2.5 million or less. Since this contractor exceeds that threshold with $2,800,000, the higher bond amount applies.
Option C: $75,000
$75,000 is not a valid bond amount specified in Virginia contractor licensing regulations. Virginia uses a two-tier system with $50,000 for smaller contractors and $100,000 for larger ones.
Option D: $150,000
$150,000 exceeds the maximum bond requirement for Class A contractors in Virginia. The highest bond amount required is $100,000 for contractors with receipts over $2.5 million.
Memory Technique
Remember '2.5 and 100': If receipts are over $2.5 million, bond jumps to $100K. Below $2.5M stays at $50K.
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