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Break-Even Analysis of an MBA Program

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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 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. Additionally, for every student over 100, the university must hire an adjunct professor and with each additional 25 students and a fraction thereof. Salary and administrative cost for adjunct professor is $3,000.

a. How many students does the college need to enroll in the first yeaar to break even?
b. If the college can enroll 150 students the first year, how much profit will it make?
c. If the college's profits are greater than 40% of its cost in the first year, it will raise tuition 4% if the profits are less than 40% it will raise tuition 6%, what will the colleges tuition be in the second (2nd) year?

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  • BSc, Banaras Hindu University
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