Question
Consider the following cash flow of a contracting company in a construction project. Period Cash Flow (million dollars) 50 1 30 2 10 3 20
Consider the following cash flow of a contracting company in a construction project. Period Cash Flow (million dollars) 50 1 30 2 10 3 20 4 30 60 Negative () sign indicates investment or expenses. The IRR for this cash flow is 11.42% as computed using Excel. This was a lump-sum fixed price contract. The contractor was not happy about this, the company expected a higher rate of return. What do you think the company could have done to increase the R Given that the owner gave the contractor options to determine the periodic progress payment amounts by adjusting the amount of profit and overhead, upfront payment, etc. without changing the agreed upon fixed price Give at least two possible ways RR could have been increased in this scenario. You are not expected to calculate different options, just answer conceptually. 2 points Save Answe Period Consider the following cash flow of a contracting company in a construction project. Cash Flow (million dollars) 0 1 -50 -30 2 10 3 20 4 30 5 60 Negative (-) sign indicates investment or expenses. The IRR for this cash flow is 11.42% as computed using Excel. This was a lump-sum fixed price contract. The contractor was not happy about this, the company expected a higher rate of return. What do you think the company could have done to increase the IRR? Given that the owner gave the contractor options to determine the periodic progress payment amounts by adjusting the amount of profit and overhead, upfront payment, etc. without changing the agreed upon fixed price. Give at least two possible ways IRR could have been increased in this scenario. You are not expected to calculate different options, just answer conceptually
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