Answered step by step
Verified Expert Solution
Question
1 Approved Answer
. . 2. You are the chief financial officer of a construction company called ExcellentBuilder which is interested in the following construction project: Four activities
. . 2. You are the chief financial officer of a construction company called ExcellentBuilder which is interested in the following construction project: Four activities are involved - Name(Duration, Direct Cost): A(60days, $50,000), B(60days, $40,000), C(45days, $60,000), and D(60days, $30,000) Monthly indirect cost is $5000. ExcellentBuilder wants to have 25% markup. Retainage is 10% of all validated progress payments until one-half of the contract value. Payment requests are submitted at the end of each month, and payments are received one month later. ExcellentBuilder needs to finance the construction project from a line of credit (overdraft account) with an interest rate of one percent per month. The interest is charged at the end of each month. Deposit on the overdraft account does not generate interest benefit for the contractor. Logical relationships: Activities B must begin at least 30 days after the start of activity A. Activity C must begin at least 15 days after the start of activity B. Activities D must begin after the finish of activity A. a) Calculate the peak financial requirement for the contractor to know how much credit must be made available at the bank and develop the cash flow diagram. b) Generate the cash flow diagram and calculate the net present value with a monthly interest rate of 1%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started