Analyzing the total profit of college

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Analyzing the total profit of college when there is decrease in enrollment due to increase in tuition fee.

Houghton College is planning to begin a new graduate degree program in Mathematics. The initial startup cost for computing equipment, facilities, course development and staff recruitment is $350,000. The college plans to charge tuition for the program at $21,000 per year per student. Administration costs are expected to be $12,000 per student. In addition the College expects to pay out an average of $3,000 per student in scholarship awards.

The college believes it can increase tuition to $24,000 but doing so will reduce enrollment by 20%. Should the college consider increasing their tuition? Explain your answer.

Reference no: EM1315899

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