Given the cost expenditures for a small project as shown in Table 1,

1. Calculate the overdraft and determine the peak financial requirement; (this part is done)
2. Develop the cash flow profile that is needed to calculate the rate of return of the project;
3. Find the rate of return from the project.

Assume:

25% markup

10% retainage for only the first two months Interest rate = 1% per month

Payments are billed at the end of a month and received one month later

Table 1. Overdral Calclations 2 $65,000 $10,000 $75,000 3 $15,000 $10,000 $25,000 Month $25,000 $10,000 $35,000 $55,000 $10,000 $65,000 Direct cost Indircct cost Subtal 25% marku Marku Total billed 10% Retainage withheld Payment received Total cost to date Total amount billed to date Total amount paid to date Ovcrdraft incurred Interest on overdraft balance (100 per month Accumulated overdraft Note Direct and indirect cost occur at the beginning of the month Retainage is only taken for the firs two months. Month 2 $65,000 5,000 3 $15,000 5,000 $20,000 4 Direct cost $25,000 $55,000 5,000 $30,000 $60,000 5,000 Indirect cost $70,000 25% Marku $5,000 $87,500 $15,000 $37,500 $17.500 $7,500 $75,000 Total billed 10% $25,000 $7,500 $33,750 160,000 Retainage withheld Pavment received Total cost to date Total amount billed to date Total amount paid to date Overdraft incurred Interest on overdraft balance $3,750 $67,500$87,500 $36,250 180,000 $30,000 $90,000 $37,500 $112,500$200,000 $225,000 $33,750 $101,250$188,750$225,000 $30,000$60,000.00 $36,250.00 -$47,500.00-$87,500.00 -$36,250 300.00 1% per month Accumulated overdraft $1,274.53 903.00 812,28 $30,000 $90,300.00 $127,453.00 $81,227.53-$5,460.19-$41,710