A construction company is negotiating on a construction project with a six month

Question

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 a month after they are received. The owner also holds a 20% 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 20% from the subcontractor’s payment. The construction company pays for labor weekly. The projected monthly material, labor, and subcontractor costs follow. Calculate Cash Flow of first two months and the amount of Total Cash at months 0, 1, 2.

COSTS MATERIALS ($) 8,800 14,200 21,000 6,800 5,100 4,100 60,000 LABOR ($) 8,100 11,900 19,800 7,600 7,000 4,100 58,500 SUB. ($) 13,100 31,400 31,700 28,100 17,900 9,300 131,500 MONTH BILL TO OWNER (S) 33,000 63,200 79,800 46,800 33,000 19,200 275,000 6 Total Round the number to the closest integer number and input it without "$" and, signs. Cash 0 Cash Flow 1' Cash 1 Cash FloW 1 Cash 1 Cash FloW 2' Cash 2 Cash FloW 2 Cash 2

Explanation / Answer

Month 1 2 3 4 5 6 7 Bill to Owner ($) 33,000 63,200 79,800 46,800 33,000 19,200 Materials ($) 8,800 14,200 21,000 6,800 5,100 4,100 Labor ($) 8,100 11,900 19,800 7,600 7,000 4,100 Sub. ($) 13,100 31,400 31,700 28,100 17,900 9,300 Total Cost 30,000 57,500 72,500 42,500 30,000 17,500 Profit 3,000 5,700 7,300 4,300 3,000 1,700 Retention 6600 12640 15960 9360 6600 Net Receipt 26,400 50,560 63,840 37,440 26,400 70,360 Payment Materials ($) 8,800 14,200 21,000 6,800 5,100 4,100 Labor ($) 8,100 11,900 19,800 7,600 7,000 4,100 Sub. ($) after retention of 20% 10,480 25,120 25,360 22,480 14,320 33,740 Total Payment 8,100 31,180 59,120 53,960 36,280 23,520 37,840 Cash Flow at Month End -8,100 -4,780 -8,560 9,880 1,160 2,880 32,520 Total Cash at Month End -8,100 -12,880 -21,440 -11,560 -10,400 -7,520 25,000

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