Identify the internal rate of return for this project
Identify the internal rate of return for this project
Problem Set 5 (Ch. 12) Project Cash Flow
Your Name Here
Overview:
Final ‘problem sets’ should include a word document (.docx) (12-point font, 1” margins, times new roman) that responds to each individual problem below. Include the problem statement in this document, as well as your solution. Make sure that each solution includes:
A description of what you did and how you did it;
All values clearly labeled with units (e.g., “work days”, “crews”, “workers”);
A reference included for any reference to a table, figure, or equation provided in a text; and
A clear description/reference to what you found;
All calculations (formulas and how they are used) must be shown; and
Calculations can be completed in excel, but must be documented in full professionally in this word document.
Given Information:
Use the following information for all problems in this Problem Set. A sixth month project has the direct cost distribution shown in Table 1. Indirect costs are expected to include $4,000 per month for the duration of the construction. The company is factoring in a 30% markup and 10% retainage for the first three months of the project. The interest on the overdraft is 1.1%, and there is currently no mobilization money being injected into the project during month 1.
Table 1 Direct Costs by Month
Month Cumulative Direct Costs Monthly Direct Costs
1 $ 15,000 $ 15,000
2 $ 60,000 $ 45,000
3 $ 125,000 $ 65,000
4 $ 155,000 $ 30,000
5 $ 180,000 $ 25,000
6 $ 195,000 $ 15,000
Problem #1: Calculate the monthly cash flow through ‘month 8’ of the project, including the following:
Direct and indirect costs
total billed,
retainage withheld,
payment received,
total cost to date,
total amount billed to date,
total paid to date,
overdraft at the end of the month,
interest on overdraft balance, and
total amount financed.
Solution #1:
Problem #2: Develop a graphic that shows the overdraft profile, cumulative direct costs, and cumulative payment received for the duration of the project.
Solution #2:
Problem #3: Develop a bar chart of expenditures and revenues for each month for the duration of the project.
Solution #3:
Problem #4: Identify the internal rate of return for this project.
Solution #4:
Problem EXTRA: If the owner agrees to inject $25,000 of mobilization money at the beginning of the project, what will the (a) total amount billed at the end of the project, (b) profit for the contractor at the end of the project, and (c) rate of return.
Solution EXTRA:
