Question

The 15 homes in a new development are each to be sold for one of three different prices so that the developer receives an average (arithmetic mean) of $200,000 per home. If 4 of the homes are to be sold for $170,000 each and 5 are to be sold for $200,000 each, what will be the selling price of each of the remaining 6 homes?

A. $200,000
B. $210,000
C. $215,000
D. $220,000
E. $230,000

Answer 1

Answer:

D. $220,000

Explanation:

In order to calculate the selling price of each of the remaining 6 homes, we need to do the following calculations shown below:

As the average of 15 homes is $200,000 each. Therefore, the total price would be

= $200,000 × 15

= $3,000,000

Now for 4 houses, the selling price would be

= $170,000 × 4

= $680,000

And for 5 homes, the selling price would be

= $200,000 × 4

= $1,000,000.

Now the selling price for 6 homes would be

= $3,000,000 - $680,000 - $1,000,000

= $1,320,000

And the average would be

=  $1,320,000 ÷ 6 homes

= $220,000