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 15 days after they are received. The owner also holds 10% 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 10% from the subcontractor’s payment. The construction company pays for labor weekly. The projected monthly material, labor, and subcontractor costs are shown in Table 12-10. 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? 

 

Transcribed Image Text:

Month Materials ($) 1 33,700 54,100 69,600 17,200 14,700 11,600 200,900 23 4 5 6 Total Costs Labor ($) 25,300 42,400 77,900 17,900 21,900 12,700 198,100 Sub. ($) Bill to Owner ($) 35,600 101,200 125,200 237,200 93,600 258,000 105,700 150,700 60,400 103,800 35,600 64,100 456,100 915,000