The College of Business at Tech is planning to begin an online MBA program. The initial start- up cost for computing equipment, facilities, course development, and staff recruitment and development is $350,000. The college plans to charge tuition of $18,000 per student per year. However, the university administration will charge the college $12,000 per student for the first 100 students enrolled each year for administrative costs and its share of the tuition payments.
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How many students does the college need to enroll in the first year to break even?
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If the college can enroll 75 students the first year, how much profit will it make?
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The college believes it can increase tuition to $24,000, but doing so would reduce enrollment to 35. Should the college consider doing this?