## Oliver 75 - 16th Question

suhail1097@gmail.com
Beginner
Posts: 24
Joined: Mon Sep 21, 2015 6:26 am

### Oliver 75 - 16th Question

Hi Friends,

I need help in following PTA question
You are running a project for a customer based on a cost-reimbursable contract with the following terms:

Target costs: \$1,000,000
Fixed fee: \$100,000
Benefit/cost sharing: 80%/ 20%
Price ceiling: \$1,200,000
Which is the PTA (= point of total assumption, break point) of the project?

\$1,300,000
\$1,500,000
\$80,000
\$1,125,000

what i know about PTA formula is Price PTA = (Ceiling Price – Target Price) / Buyer’s Share Ration + Target Cost

My confusion is in cost sharing 2 value is given i.e. 80%/20%, hence I am not able to solve this question

Pls help
ujjal_show
Super Member
Posts: 1024
Joined: Thu Sep 17, 2015 12:59 pm

### Re: Oiver 75 question q. no. 16

suhail1097@gmail.com
Beginner
Posts: 24
Joined: Mon Sep 21, 2015 6:26 am

### Re: Oiver 75 question q. no. 16

Hi Friend,

I am putting the formula as =(1200000-100000)/0.8+1000000 but it is not giving me the desired value

Pls give some more insight

Thanks,
Suhail
vivek3377
Super Member
Posts: 391
Joined: Thu Sep 10, 2015 2:32 am

### Re: Oiver 75 question q. no. 16

Try this -
Total Price = Target Cost + Target Fee = 1,000,000 + 100,000 = 1,100,000
PTA = ((Ceiling price - Target Price)/ buyers share) + Target Cost
PTA = ((1,200,000 - 1,100,000)/0.8) + 1,000,000
PTA = (100,000/0.8) + 1,000,000 = 125,000 + 1,000,000 = 1,125,000
suhail1097@gmail.com
Beginner
Posts: 24
Joined: Mon Sep 21, 2015 6:26 am

### Re: Oiver 75 question q. no. 16

thanks I am clear now
jyotimayank
Expert
Posts: 519
Joined: Mon Mar 09, 2015 6:01 am

### Re: Oliver 75 - 16th Question

For more insight of this topic please refer to the following links
Blog
http://www.izenbridge.com/blog/pmp-exam ... ssumption/

Video
http://www.izenbridge.com/videogallery/ ... zenbridge/
Jyoti Gupta
PMP Mentor & Coach

iZenbridge Consultancy Pvt Ltd