Construction Management
5th Edition
ISBN: 9781119256809
Author: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko
Publisher: WILEY
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Question
Chapter 6, Problem 8RQE
To determine
How much John will have to pay in taxes for the $100,000 from the partnership with his siblings?
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Students have asked these similar questions
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?
Chapter 6 Solutions
Construction Management
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- A client plans to construct a manufacturing plant that involves multiple engineering disciplines. Calculate the total engineering fees including taxes based on the following: Mechanical Works, $1,540,000 Electrical Works, $1,780,000 Earth Works, $950,000 Civil Works, $2,125,100 Environmental Works, $1,325,000 Basis B fees = 14% There are no office feesDo not include the Contractor payment in the engineering fees. Taxes = 13%arrow_forwardYou 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_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
- In a cost reimbursable contract, the GMP is established at $18,000,000. The contract calls for a fixed fee of one million dollars for the contractor as long as the actual cost does not exceed the GMP. There is an incentive clause that shares the savings below GMP 60% owner and 40% contractor. What is the owner's cost and contractor's profit if actual cost excluding contractor's fee is $17,400,000?arrow_forwardA 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_forward
- A client plans to construct a manufacturing plant that involves multiple engineering disciplines. Calculate the total engineering fees including taxes based on the following: Mechanical Works, $1,540,000 Electrical Works, $1,780,000 Earth Works, $950,000 Civil Works, $2,125,100 Environmental Works, $1,325,000 Basis B fees = 9% There are no office fees Taxes = 13%arrow_forward• Michael purchased a laptop in installment basis worth P25800 and he needs to pay P3200 per beginning of the quarter with an interest rate of 2% compounded quarterly. How many quarters should he pay?arrow_forward•1 You are planning to build a new home with approximately 2,000–2,500 gross square feet of living space on one floor. In addition, you are planning an attached two-car garage (with storage space) of approximately 450 gross square feet. Develop a cost and revenue structure for designing and constructing, operating (occupying) for 10 years, and then selling the home at the end of the 10th year. 176arrow_forward
- How much of an impact does a formal schedule have on the subcontractor's ability to make a profit?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_forwardAs a rental for a building, the owner received two offer: a) 50,000 a year for 80 years, the rental for each year being paid at the start of each year. b) 30,000 the first year, 40,000 second year, 50,000 the third year, and 60,000 for the next 5 years with all rentals paid at the beginning of each year. If money is worth 12%, which is better offer?arrow_forward
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