Construction Financial Management

Construction Financial Management

6Question 1SOHAIL Construction Limited started business in January 2014and is in the process of producing the budget for the year 2015. During the year 2014, the company won and started four contracts. The value, starting date, duration and profit are as follows:Contract Month started Duration (Months)Value (£M)Profit (£M)PJanuary22150.75QApril18100.5RAugust16120.6SNovember1860.3a)Calculate the turnover for the year 2015if no more contracts are won during that year (assume a uniform rate of valid build up on any of the contracts).(7marks)b)Calculate the total value of contracts to be won during the year 2015for the contractor to be able to achieve the following objectives:1.Pay the second of 10 annual installments of a £10million loan taken at the beginning of the 2014(assuming 9% interest rate = CR of 0.1558)2.Pay dividends of 50p per share for the 2million shares used to start the company3.Retained profit of £2millionYou may assume that the average duration of projects to be started in 2015is 16 months.(7marks)c)While analyzing the market, it was found that the company during 2014, had a market share (value of work executed by contractor versus the total market out put for that year) of10%. If demand for construction in this market is expected to increase by 25% in 2015, calculate the required market share the contractor has to achieve in order to meet the profit targets set in (1b) above.(9 marks)d)Of what benefits are the calculations to the contractor in developing corporate strategy for the year 2015? (

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