SOLUTION: Problem Statement
In 2010 a local construction company built a total of 52 homes for a total cost of $4.3 million. By the end of
2010 they sold all 52 homes for a revenue of $8
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-> SOLUTION: Problem Statement
In 2010 a local construction company built a total of 52 homes for a total cost of $4.3 million. By the end of
2010 they sold all 52 homes for a revenue of $8
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Question 1197603: Problem Statement
In 2010 a local construction company built a total of 52 homes for a total cost of $4.3 million. By the end of
2010 they sold all 52 homes for a revenue of $8 million thus making a profit of $3.7 million. Since the company
made a profit of $3.7 million, their net profit margin was
Profit
Revenue
=
3.7
8
= 46.25%
which indicates they made $0.4625 for each dollar profit.
Since 2010 the cost of building materials and labor has steadily increased at a rate of $0.31 million per year. The
selling price of housing has also increased but at a slower rate of $0.08 million per year.
Assume the cost of building homes and the revenue generated by selling the homes can be modeled by the
following linear equations.
Cost in year π₯ : πΆ(π₯) = 0.31π₯ + 4.3 millions of dollars
Revenue in year π₯ : π (π₯) = 0.08π₯ + 8 millions of dollars
Note the variable x represents the number of years since 2010.
Questions
1. Calculate the companyβs net profit margin for 2015. Round all calculations to two decimal places.
a. Determine the value of x for 2015.
