A performance and payment bond premium is 1.25% of a $3,600,000 contract. What is the premium?
Correct Answer
D) $45,000
Premium is $3,600,000 x 1.25% = $45,000.
Why This Is the Correct Answer
Premium is $3,600,000 x 1.25% = $45,000.
Why the Other Options Are Wrong
Option A: $4,500
bond premium, choice a: $4,500 omits a required add-on/subtraction; the numeric gap is $40,500.
Option B: $36,000
bond premium, choice b: $36,000 omits a required add-on/subtraction; the numeric gap is $9,000.
Option C: $48,600
bond premium, choice d: $48,600 adds an extra unstated add-on/subtraction; the numeric gap is $3,600.
Memory Technique
Say the bond premium rule aloud as a chain; the chain ends at $45,000, not an intermediate stop.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "bond premium" to confirm that Premium is $3,600,000 x 1.25% = $45,000.
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