Real-Life Math
You are a petroleum landman. One of your duties is to track down the person or people who own the mineral rights to the land that your company would like to use to drill for oil or gasoline. Once you have found the owners, it is time to negotiate.
To negotiate the purchase or lease of right from the landowners, you present them with 3 options:
- They can refuse to allow your company to use the land.
- They can sell the land, outright, to your company.
- They can negotiate to receive a percentage of the profits if a well is found on the land and it does make a profit.
Recently, you concluded negotiations with a 5-member family, who chose to receive a percentage of the profits. The percentage that was finally agreed to was 20 percent. That would be divided equally between each family member.
The well has been drilled and oil has been found. Now it is time to send those 5 members each a check for their percentage of the profits.
"I wish I had paid more attention during my math classes," chuckles landman Jeff Myers. "It's not uncommon to find dozens of people who own partial interest in the land that my company is interested in, and I have to figure out how much in royalties each of those people is entitled to receive. Sometimes, the calculations can get very involved."
If the profits from the well for this quarter were $150,000, and each of the 5 family members get an equal share of the agreed-upon 20 percent, how much would each family member receive?