A construction company is negotiating on a construction project with a six- month duration. On the last day of each month the construction company may bill the owner for the work completed during the month. The owner pays the monthly bills 15 days after they are received. The owner also holds a 10% retention. Final payment is expected one month after completion of the project and includes payment of the retention. The construction company pays material suppliers in full when it receives payment from the owner. The construction company pays subcontractors when it receives payment from the owner but withholds 10% from the subcontractors payment. The construction company pays for labor weekly. The projected monthly material, labor, and subcontractor costs follow. Determine the monthly cash flows and the total cash generated by the project at the end of each month and just before each payment is received from the projects owner. A- What is the maximum amount of cash invested by the company during the completion of the project? The construction company decides to act as the owner on the project. The construction company plans to sell the project for $1,250,000 at the end of the seventh month. In addition to the construction costs the construction company has the following soft costs: land purchase, $250,000; engineering and design fees, $30,000; building permits, $7,000; government fees, $15,000; and other miscellaneous costs, $10,000. The soft costs will be paid at the end of month zero. The construction company pays material suppliers in full on the fifteenth day of the month following the month the materials were supplied to the project. For example, materials supplied during the first month will be paid for on the fifteenth of the second month. The subcontractors will be paid on the same schedule as the suppliers; however, the construction company will withhold 10% retention from the

subcontractors payments, which will be paid to the subcontractors on the fifteenth day of the seventh month. The construction company pays for labor weekly. B- Determine the monthly cash flows and total cash generated by the project at the end of each month and just before the payment is received. What is the maximum amount of cash invested by the company during the completion of the project?