The formula to calculate the performance bond amount is:
\[ \text{PB} = \left(\frac{\text{C} \times \text{P}}{100}\right) \]
Where:
A performance bond is a type of surety bond issued by a bank or an insurance company to guarantee satisfactory completion of a project by a contractor. It is typically used in the construction industry as a means of insuring a client against the risk of a contractor failing to fulfill contractual obligations. If the contractor fails to perform, the client can claim compensation up to the full amount of the bond.
Let's assume the following:
Step 1: Calculate the performance bond amount:
\[ \text{PB} = \left(\frac{500,000 \times 10}{100}\right) = 50,000 \]
Therefore, the performance bond amount is $50,000.
