FOR REFERENCE:
PLEASE FILL OUT FOLLOWING THE TABLE SHOWN BELOW
12. The construction company in Problem 8 decides to act as the owner on the project. The construction company will be paid $500,000 for the project at the end of the seventh month. In addition to the construction costs, the construction company has the following soft costs: land purchase, $150,000; engineering and design fees, $15,000, building permits, $3,000; government fees, $5,000, and other miscellaneous costs, $10,000. The soft costs will be paid at the end of month zero. The construction company pays material suppliers in full on the last day of the month following the month the materials were supplied to the project. The subcontractors will be paid on the same schedule as the suppliers; however, the construction company will withhold 5% retention from the subcontractors' payments, which will be paid to the subcontractors at the end of the seventh month. The construction company pays for labor weekly. Determine the monthly cash flows and total cash generated by the project at the end of each month and just before the payment is received. What is the maximum amount of cash invested by the company during the completion of the project? 8. A construction company is negotiating on a construction project with a six-month duration. On the last day of each month the construction company may bill the owner for the work completed during the month. The owner pays the monthly bills one month after they are received. The owner also holds 5% retention. Final payment is expected one month after completion of the project and includes payment of the retention. The construction company pays material suppliers in full when it receives payment from the owner. The construction company pays subcontractors when it receives payment from the owner but withholds 5% retention from the subcontractor's payment. The construction company pays for labor weekly. The projected monthly material, labor, and subcontractor costs, as well as the amount the construction company will bill the project's owner each month, are shown in Table 12-90. Determine the monthly cash flows and the total cash generated by the project at the end of each month and just before each payment is received from the project's owner. What is the maximum amount of cash invested by the company during the completion of the project? Table 12-9 Data for Problem 8 Costs Month Materials ($) Labor ($) Sub. ($) Bill to Owner ($) 1 8,800 8,100 13,100 33,000 2 14,200 11,900 31,400 63,200 3 21,000 19,800 31,700 79,800 4 6,800 7,600 28,100 46,800 5 5,100 7,000 17,900 33,000 6 4.100 4,100 9,300 19,200 Total 60,000 58,500 131,500 275,000 B C D E G . L M N C 0 1 2 5 6 8 9 10 11 12 $0 50 $0 $0 50 $0 50 A 1 Sales Price 2 Sales Month 3 Retention 4 Payment in days 5 6 Month 7 Soft Cost 8 Land 9 Engineering & Design Fees 10 Building Permits 11 Government Fees 12 Other 13 Materials 14 Labor 15 Subcontractor 16 Total Costs 17 18 Receipts 19 20 Payments 21 Soft costs 22 Materials 23 Labor 24 Subcontractor 25 Total Payments 26 27 Cash Flow Before Payment 28 29 Total Cash Before Payment 30 31 Cash Flow at Month's end 32 33 Total Cash at Month's End $0 $0 50 $0 50 $0 $0 24
