The principals of Wheaton Builders are about to close on a construction loan from the Wheaton Savings and Loan for their latest project, Country Hills. The total project cost including on/off site improvements, hard costs and soft costs are projected at $12,000,000. Seventy percent of the budget is costs to be financed by the loan. Seventy five percent of the construction will take place ratably during the first four months. Twenty Five percent will take place ratably over the next seven months. Interest on the costs is paid in arrears and ten percent of each draw (not including interest) is retained until the final draw.
Calculate the total loan Wheaton Savings will provide Wheaton Builders by formulating a construction loan schedule.
Assume annual interest rate of 12%.