Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. (12 points) Consider the following project: Assume it is of 8-month duration. The cost of borrowing money is 0.5% per month. Monthly pay estimates

image text in transcribed
3. (12 points) Consider the following project: Assume it is of 8-month duration. The cost of borrowing money is 0.5% per month. Monthly pay estimates will be submitted on the fifth of the month, for work completed as of the last day of the preceding month, with payments anticipated 30 days later. Under the terms of the contract, the owner will retain 5% of the contract amount. Estimated cost is $320,000. Using a 10% markup, the contractor bid $352,000. Expected monthly costs are $44,000 per month. Calculate the following: a. What is the sum of the contractor's outlay at the end of the first month, including interest on money borrowed? b. Under the terms of the contract, for what amount will the contractor invoice the owner on day 35 of the job? c. At the end of month 2, what is the contractor's running total of net revenue, including all expenses and all interest up to that point? d. By what day can the contractor expect to receive the first payment from the owner and in what amount will it be? 3. (12 points) Consider the following project: Assume it is of 8-month duration. The cost of borrowing money is 0.5% per month. Monthly pay estimates will be submitted on the fifth of the month, for work completed as of the last day of the preceding month, with payments anticipated 30 days later. Under the terms of the contract, the owner will retain 5% of the contract amount. Estimated cost is $320,000. Using a 10% markup, the contractor bid $352,000. Expected monthly costs are $44,000 per month. Calculate the following: a. What is the sum of the contractor's outlay at the end of the first month, including interest on money borrowed? b. Under the terms of the contract, for what amount will the contractor invoice the owner on day 35 of the job? c. At the end of month 2, what is the contractor's running total of net revenue, including all expenses and all interest up to that point? d. By what day can the contractor expect to receive the first payment from the owner and in what amount will it be

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Wealthtech Book The FinTech Handbook For Investors Entrepreneurs And Finance Visionaries

Authors: Susanne Chishti, Thomas Puschmann

1st Edition

1119362156, 978-1119362159

More Books

Students also viewed these Finance questions

Question

Explain how routed backbones work.

Answered: 1 week ago