Final answer:
You are entitled to deduct the cost of the missing bathroom from the original contract price with the contractor. The correct amount to pay the contractor is the original sum of $500,000 with a deduction of $20,000 for the additional bathroom, totaling $480,000.
Step-by-step explanation:
If you agreed with the contractor that your house would have 3 bathrooms, and the contractor only built 2, then the contractor has not fulfilled the original terms of your agreement. Therefore, you would not be obligated to pay the full $500,000 since the house is missing a bathroom as per the contract. Adding another bathroom would cost you an additional $20,000, so the main answer to how much you are entitled to pay the contractor is Option C: $520,000 with a deduction of $20,000 for the missing bathroom. This means you would only need to pay the contractor $500,000 - the originally agreed price minus the cost to add the missing bathroom yourself.As an explanation in more than 100 words: When entering into a construction contract, the details such as the number of bathrooms should be specified. If these terms are not met, the contractor is responsible for making things right, either by completing the work as specified or compensating the homeowner for the difference in value or cost to complete the work. In this situation, because the contractor failed to build the third bathroom, it is reasonable for the homeowner to deduct the cost of building the missing bathroom from the final payment.In conclusion, you should not have to pay more than the original contract price to receive the house as it was supposed to be built. A fair settlement would be to pay the original amount minus any costs you incur to complete the house as per the original contract.