A construction company is negotiating on a construction project with a six-month duration. On the last day of each month

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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 12-9. 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?

A Construction Company Is Negotiating On A Construction Project With A Six Month Duration On The Last Day Of Each Month 1 (32.51 KiB) Viewed 74 times

Table 12-9 Data for Problem 8 Costs Materials Sub. ($) Bill to Owner Labor ($) Month 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 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