Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Question
Chapter 12, Problem 3DQ
To determine
Analyze the need for including the profit and overhead markup while calculating the cash requirements of construction project.
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When considering a project’s Operating Cash Flows, where are Financing
Costs included?
Is accounting for the tax effects on project cash flows worth the effort? Please discuss and justify your answer.
Why should companies use a project’s cash flows rather thanaccounting income when determining a project’s NPV?
Chapter 12 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 12 - Prob. 1DQCh. 12 - How does subcontracting out labor that would...Ch. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - How does the rate of progress on a project affect...Ch. 12 - How does retention affect the projects need for...Ch. 12 - Prob. 7DQCh. 12 - A construction company is negotiating on a...Ch. 12 - A construction company is negotiating on a...Ch. 12 - Prob. 10P
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- Which of the following cash flows should not be considered when evaluating a project? Changes in working capital Shipping and installation costs Sunk costs Opportunity costs Externalitiesarrow_forwardHow can the calculation of Net Income Attributable be done to a new project?arrow_forwardDiscussion:Is the added precision from including taxes and depreciation in calculating project cash flows worth the effort? Should they be included in the calculations? Please discuss and justify your answer.arrow_forward
- Why are interest charges not deducted when a projects cash flows are calculated for use in a capital budgeting analysis?arrow_forwardWhat information is included in the capital asset budget?arrow_forwardAre the revenues from the goods and services produced in the new facility, the expected future cash inflows in the investment category?arrow_forward
- How do we develop the project cash flows, after taxes, over the life of the project?arrow_forwardWhy are interest charges not deducted when a project’s cash flows are calculated for use in a capital budgeting analysis?arrow_forwardHow can we determine the period necessary to recover both the capitalinvestment and the cost of funds required to support the investment?arrow_forward
- Determine the period necessary to recover both the capital investment and the cost of funds required to support the investment for a project?arrow_forwardWhy should the cost of capital used in capital budgeting be calculated as a weighted average of the capital component rather than the cost of the specific financing used to fund a particular project?arrow_forward
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