Question

Question 1 (7 marks) You are a contractor for a client. Listed as "Cost" below you find your projected cost expenditures for this project. Using the assumptions listed below, calculate the Total Cumulative Cash Flow. To do this, develop a table and submit the table as a separate assignment submission on Canvas (see Assignment description on Canvas). Then copy the required values (.e. the ones highlighted with bold font) into the input fields in the table below. You need to do both!! Also: You may round your dollar values to full dollars. (Enter dollar values without a $; but don't forget to include the - sign, if you enter a negative value for the Total Cumulative Cash Flow. Do not enter - signs for the other cash outs! A negative "cash out" would be a cash in. ;-)) The table below shows the suggested structure for your cash flow calculation. Assumptions: 1. Your mark-up is 8% of the cost. 2. Payments are billed to the client at the end of the month and received 1 month(s) later. 3. Costs are paid for in the month they incur. 4. For each month, the client retains 15% of the billed amount (i.e. the Total Worth). 40% of these retentions are then paid back by the owner at the end of the project (i.e. in month 5). The remaining 60% of the retention are paid back by the owner in month 6. 5. A finance charge applies to all negative captims. The monthly interest rate is 1.4%. Finance charges are billed for at the end of the month (and should there be recorded as positive values in the cash flow, i.e. the last row). The charges will be paid for in the month after they incur (i.e. after they were billed). Finance charges will not be billed back to the client. Month Cost Mark-up (8%) Total Worth (Monthly value billed to the ollent Retention (159) Monthly Cach in Cumulative cash in Monthly Cach Out Cumulative Cash Out Total Cumulative Cach Flow Finance charge bill (1.4%)

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Answer 1

	1	2	3	4	5	6
Cost	70000	23400	27700	14800	0	0
Mark up	5600	1872	2216	1184	0	0
Billed Value	75601	25274	29919	15988
Received		75601	25274	29919	15988	0
Retention 15%		11340	3791	4488	2398	0
40% retention					8807
60% Release of retention						13211
85% relase	0	64260.85	21483	25431	13590	0
Monthly cash in	0	64261	21483	25431	22397	13211
Monthly Cash out	-70000	-23400	-27700	-14800	0	0
Total Cumulative Cash Flow	-70000	40861	-6217	10631	22397	13211
Net Cash flow after charging previous negative balance	-70000	-29139	-35356	-24725	-2328	10883
Fin Charges	-980	-408	-495	-346	-33	0
Cash flow after charges	-70000	39881	-6625	10136	22051	13178