Question

In 2009, International University (IU) had an enrollment of 25,000 undergraduates, each of whom paid $6,000 per year in tuition. In 2010, enrollment increased to 26,000 students, and tuition was raised 5%. In 2011, IU received $178,200,000 in revenue from student tuition, and enrollment was 27,000 students. In 2012, it is estimated that tuition will be $6,900 and IU needs to receive 9% more total revenue from tuition than in 2011.

a) What was the tuition in 2010?

b) What was the tuition in 2011?

c) What was the growth rate of tuition from 2010 to 2011?

d) What is the revenue goal for 2012?

e) How many students must IU enroll to meet the 2012 revenue goal?

f) What is the average annual growth rate of tuition for 2009 to 2012?

Answer 1

(a) Tuition in 2009 = $ 6000, Tuition Growth = 5 %

Tuition in 2010 = 6000 x 1.05 = $ 6300

(b) Revenue from Student Tuition 2011 = 178200000 $

Number of Enrollments 2011 = 27000

Tuition in 2011 = 178200000 / 27000 = $ 6600

(c) Growth Rate in Tuition = [6600 - 6300] / 6300 = 0.47619 or 4.7619 % ~ 4.76 %

(d) Target Revenue Growth Rate = 9 %, Revenue from Tuition 2011 = $ 178200000

Therefore, Required Revenue from Tuition 2012 = 178200000 x 1.09 = $ 194238000

NOTE: Please raise separate queries for solutions to the remaining sub-parts as one query is restricted to the solution of only one question with upto a maximum of FOUR sub-parts.