Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Chapter 12, Problem 3RQE
To determine
Calculate the rate of return (ROR) of the contractor using the given data.
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5. Assume a project where all possible receipts and payments, including the retention, are due one month after the project ends. For this project, the total amount of cash generated one month after the project
have been received and all bills have been paid) will be equal to
a. Gross profit
b. Net profit
c. Project contract amount
d. General overhead
over (when all payments
The activities involved in the construction of a small building are given below. The price of the work contained in each activity is listed in the table. The contractor undertaking this project would like you to prepare graphs of cumulative expense and income to date against time for activities starting as early as possible. The mark-up is 10% of tender value and retention is 5%. Measurement is made monthly with a payment delay of one month. The retention is paid at the end of the contract. To simplify the calculations, you may assume that all costs must be met by the end of the month in which they are incurred. What is the maximum amount of cash the contractor needs to execute this contract and when does he require this amount?
No.
Activity
Duration (months)
Predecessors
Overlap
Value (LE)
10
20
30
40
50
60
Excavation
Concrete bases
Erect frames
Concrete floor slab
Fix cladding
Install plant
2
3
1.5
1
1.5
1
-
10
20
20
30
40, 50
-
1
1
1
1
-
9000
12000…
An industrial plant bought a generator set for 90,000. Other expenses including installation amounted to 10,000. The generator set is to have a life of 17 years with a salvage value equivalent to 5.5% of the initial cost.Determine the depreciation charge during the 13th year and the book value at the end of 13 years by the:a. Straight Line Methodb. declining balance methodC. sinking fund method at 12% and d. Sum of Years Digit method
Chapter 12 Solutions
Construction Management
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- You have just bought a used track-type tractor to add to yourproduction fleet. The initial capitalized value of the tractoris $110,000. The estimated service life remaining on thetractor is 10,000 hours and the anticipated operating conditionsacross the remainder of its life are normal. The salvagevalue of the tractor is $12,000. The tractor was purchasedon July 1, 1997. a. What amount of depreciation will you claim for eachcalendar year between 2007 and 2010?b. What percent of the total depreciable amount is taken inthe first year?c. The IIT components of ownership cost based on averageannual value are:Tax: 3%Insurance: 2%Interest: 8%What cost per hour of operation would you charge tocover IIT?d. If the total average operating cost for the tractor is$23.50 per hour and the amount of overhead cost proratedto this tractor for the year is $4,000, what would beyour total hourly cost for the operation of the tractor(during the first year of its service life)?arrow_forwardUsing declining-balance depreciation with d = 18 percent, what is the depreciation charge in the 9 year for an asset costing $156400?arrow_forwardA machine was purchased for $ 8,000, with an estimated useful life of 10 years, and it has a scrap value of $ 1,000 and rate of interest = %1O. Calculate the following: The book value at the end of the ninth year using Sum of the Years- Digits method. * The book value at the end of the fourth year using constant percentage method. * The depreciation installment for the sixth year using straight line method. *arrow_forward
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