As a bank loan officer, you are required to asses a request for a construction overdraft from
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Question:
You can assume costs that will be spread evenly over the life of the project. Labour costs will be 60 (Sixty) per cent of total costs.
Interim certificates will be issued on a monthly basis and you client will be paid one month after the first interim certificate is issues.
As Malvern Constructions is well established in this industry with a 10 (ten) year operating history, you can assume that she will have no difficulty in obtaining one-month credit terms for the project.
As is usual for projects of this type a retention fund of seven and a half (7.5) percent of the contract value has been set up. Twelve (12) percent of each payment will be set aside in the retention fund until the retention fund value is seven and a half (7.5) percent of the contract value.
What is the amount the builder will receive when the first payment is made?
Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
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