This is concept box $17\mathrm{.}1$: I. Physical Characteristics Goal: To provide a preliminary development plan and financial analysis to determine whether a large$-$scale residential lot development can be built in accordance with regulatory requirements and sold at market prices sufficiently high enough to justify construction costs and the cost of land acquisition. Site: $20$ acres $(871,200$ square feet$).$ Asking price: $$1,000,000.$ Project description: Nonlinear street layout for detached, single$-$family homes. Maximum lot density per zoning and$/$or deed restriction; must average four lots per acre, minimum lot size in the development $=6,000$ square feet; no maximum limits on lot size.Circulation requirement: $15\%$ of land area for road$/$rights of way.Open space and$/$or required donation: $10\%$ of land area. Retention ponds for surface water run off.Net developable area: $75\%$ or $653,400$ square feetProposed lot mix$/$yield: $80$ lots.Square footage by lot type, including all setbacks to building lines: Type $1,32$ standard interior @ $6,000$ square feet each; Type $2,32$ premium interior @ $8,000$ square feet each; Type $3,6$ corners @ $12,837$ square feet each. II$.$ Financial Feasibility $1.$ Pricing based on market study:$$Standard interior: $$100,000$ @ $32$ lots$ $3,200,000$Premium interior: $$120,000$ @ $32$ lots$3,840,000$Corner lot: $$130,000$ @ $16$ lots$2,080,000$Total sales revenue$ $9,120,0002.$ Less: Average development cost per lot $($includes all circulation$$roadways$,$ drains, sewer, utility construction to property line of each lot$)$: $$70,025$ @ $80$ lots$ $5,602,0003.$ Less: Land asking price$1,000,0004.$ Potential gross profit$2,518,0005.$ Less: Administration, legal, commissions, advertising, and so on $(12\mathrm{.}5\%$ of gross revenue$)1,140,0006.$ Potential net profit to developer$ $1,378,000$ Margin on gross revenue: $$1,378,000$ $$9,120,000=15\%$ Return on total cost$*$: $$1,378,000$ $$7,742,000=18\%($rounded$)$ Conclusion: Project appears to be feasible; however, return projections do not include financing, discounting for the time schedule for construction, and the estimated time$/$sales rate for finished lots to builders. $*$Development $$5,602,000+$ Land $$1,000,000+$ Administration $$1,140,000$ Refer to Concept Box $17\mathrm{.}1.$ A revised market study indicates the following: pricing for standard interior lots will probably be $$103,000$ each, premium interior lots $$118,000,$ and corner lots $$125,000$; the average development cost per lot has been revised up to $$71,000$; administrative costs, and so on remain at $12\mathrm{.}5$ percent of gross revenue. Required: What will be the return on total cost based on the revised market study? Suppose that the developer wants a $21$ percent return on cost$.$ How much can be paid for the land?