Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jack MacLean has entered into a real estate development partnership with Bill Lyons and June Reese. Bill owns one-fifth of the partnership, while June has

Jack MacLean has entered into a real estate development partnership with Bill Lyons and June Reese. Bill owns one-fifth of the partnership, while June has a one-fourth interest. The partners will divide all profits on the basis of their fractional ownership. The partnership bought 900 acres of land and plans to subdivide each lot into 2.5 acres. Homes in the area have been selling for $250,000. By time of completion, Jack estimates the price of each home will increase by one-fifth of the current value. The partners sent a survey to 21,000 potential customers to see whether they should heat the homes with oil or gas. One-fifth of the customers responded by indicating a 5-to-1 preference for oil. From the results of the survey, Jack now plans to install a 270-gallon oil tank at each home. He estimates that each home will need five fills per year. The current price of home heating fuel is $3 per gallon. The partnership estimates its profit per home will be one-tenth of the selling price of each home. (Do not round intermediate calculations.) a. Calculate the number of homes to be built. b. Calculate the selling price of each home. c. Calculate the number of people responding to survey. d. Calculate the number of people desiring oil. e. Calculate the average monthly cost per house to heat using oil. (Round your answer to 2 decimal places.) f. Calculate the amount of profit Jack will receive from the sale of homes.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Management Accounting Chapters 1 To 17

Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Dave Burgstahler, Jeff Schatzberg

15th Edition

0136102654, 978-0136102656

More Books

Students also viewed these Accounting questions