Question

(1) With so many universities already in the market, why would Point Park University (or any university) decide to proceed with its new online MBA degree offering?

(2) Identify the cash flows that Point Park University (or any university) must include in its analysis of a new online MBA offering. Be specific as to which cash flows are incremental, and which ones represent revenues, expenses, working capital investments, and capital investments that should not be included in the analysis and why.

Answer 1

With so many universities already in the market, Point Park University (or any university) would decide to proceed with its new online MBA degree offering. There can be multiple reasons behind this move. A few of them are:

• The opportunity cost of students get reduced with online MBA option as they can work while learning, thereby, attracting more students to join the course in the same university in which they wanted to.
• As they would already have an established and known brand name for their other courses, they can encash the opportunity of an additional course without spending much on marketing campaigns.
• University would have to incur minimal additional infrastructure costs.
• Exceptional situations like the ongoing Covid-19 pandemic would influence the students to go for online MBA rather than the regular one.