PrepTest 139, Section 2, Question 21
In October 1999, the Law Reform Commission of(451 more words not shown)
As described in the passage,(20 more words not shown)
- APeople who join(36 more words not shown)
- BA consulting firm(31 more words not shown)
- CThe returns that(37 more words not shown)
- DThe cost of(35 more words not shown)
- EA person purchasing(41 more words not shown)
Reading the passage
An uplift fee has two features we need to keep together. Payment depends on a successful outcome, and success earns the service provider the normal fee plus an extra percentage of that fee. The extra amount is not simply a share of whatever profit the whole venture produces.
What we’re looking for
For example, doubling the usual fee would be a 100 percent uplift. Look for that kind of bonus attached to successful performance.
Working the answers
- A
These people pool their money to buy lottery tickets and divide any winnings. No one provides a service for a normal fee plus an additional fee contingent on success.
- BCorrect
The consultants are paid only if they achieve the specified result: substantially reducing expenses. Success earns them double their usual fee, which is the normal fee plus a 100 percent uplift. Both parts of the arrangement match.
- C
Sharing a risky venture's returns in proportion to the risk each partner took is not the same as paying a service provider an increased normal fee. Risk is present, but the payment structure is different.
- D
This describes how an insurance premium is calculated. It contains no service provider who earns a higher-than-normal fee only after achieving a successful result.
- E
The insurance protects a property seller against the buyer's failure to repay a loan. It does not make the seller's payment a normal service fee plus a success-dependent bonus.
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