Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Chapter 5, Problem 5RQE
To determine
Explain the advantages of a person to incorporate as a closely held corporation.
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Think-Big Development Co. is a major investor in commercial real-estate development projects. Read the problem and decide under which classification the problem falls?
• Think-Big Development Co. is a major investor in commercial real-
estate development projects.
• They are considering three large construction projects
• Construct a high-rise office building.
• Construct a hotel.
• Construct a shopping center.
· Each project requires each partner to make four investments: a
down payment now, and additional capital after one, two, and three
years,
Investmant Capital Requirements
Year
Oflice Bullding
Hotel
Shopping Center
$40 million
SB0 million
$90 million
60 million
B0 millon
50 million
90 million
80 milion
20 million
10 milien
70 millon
60 million
Net present value
$45 milion
S70 million
$50 million
Question: At what fraction should Think-Big invest in each of the
three projects?
O Resource-allocation
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.
Greg is undecided between two job offers. Fudd Associates, Inc., offers a $10,000 sign-up bonus and $50,000/year, which will be revised after three years. ABC Contractors, Inc., offers an annual salary of $54,000, which will also be revised after three years. Greg has made 12% on the moneyinvested in the stock market and believes that he can keep getting the same return if he invests the entire $10,000 bonus. Based on the salary offer, which offer is better?
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, civil-engineering and related others by exploring similar questions and additional content below.Similar questions
- 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_forwardSmith’s advertisement for bids on the construction of a sewage-disposal plant stated: “$500 per day liquidated damages if not completed in fifteen months after signing of the contract.” Reynolds saw Smith, explained the effect upon cost, and secured permission to omit this requirement. Has Smith the right to make this change? What should Smith do about other bidders?arrow_forwardIf a Contractor built in an estimate reserve contingency of $100,000 on a job and only $ 50,000 was used. What would happen to the unused portion of the contingency? O a. It would go to the Owner O b. It goes to the IRS as unearned profit tax OC It would become profit for the Contractor O d. Owner and Contractor would each get halfarrow_forward
- A factory operator bought a diesel generator set of 10,000 and agreed to pay the dealer uniform sum at the end of each year for 5 years at 8% interest compounded annually, that the final payment will cancel the dept for principal and interest. What is the annual payment?arrow_forwardAssume that Long contracted to design the superstructure and building foundations for Short’s new factory for a stated percentage of the contract price. After the contract was let, Short asked Long to augment their agreement so as to include there under (at 0.5 percent remuneration) all foundations for the machines. Can Long decline and enforce the contract as originally constituted?arrow_forwardHG Construction has recently won a contract for $1million dollars. Upon being award contract, HG contacts its subcontractors and asks them to lower their initial bid amou unethical action is known as:arrow_forward
- Using straight-line depreciation, what is the depreciation charge in the fifth year for an asset costing $144800 that has a salvage value of $41800 after 9 years?arrow_forwardA civil engineer bought a crane for erecting tall buildings. It was invoiced from Japan (Cost,Insurance, freight) to Manila ay P 60, 000. Brokerage, custom’s, permits and etc. total P 120,000. At the end of10 years, he expects to sell it for P 70,000. Tabulate and determine the depreciation charge during the 4th year andthe book value at the end of 6th year(show solution at these years) using the following: Show solutions for the first 2 yrsarrow_forwardHow can we calculate depreciation of any equipment?arrow_forward
- If you deposit $1000 per month into an investment account that pays interest at arate of 6% per year compounded quarterly, how much will be in your account atthe end of 5 years? Assume no interperiod compounding.arrow_forwardAs the new engineer in the company. you are tasked to send out a proposal for an expansion of the current manufacturing plant. As per research, you came up with a summary of the capital needed and it is amounting to Php 18,500,000.00. Annual depreciation is noted as well as 10% of your capital invested. You are asked to determine the rate of return if your projected annual profit is at Php 5,500,000.00. Express the answer in percentage, up to two decimal places/digits. Answer = Blank 1% Submit your complete handwritten solution.arrow_forward5. 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 paymentsarrow_forward
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