A recently-accredited College of Business discovers it is in dire financial trouble and wants to examine demand for services and costs to provide them next year.Market conditions may become more favorable,resulting in a 10% increase in enrollment,with a probability of 0.5,stay the same,with a probability of 0.3,or become less favorable,with a probability of 0.2 and a decrease in enrollment of 10%.There is a 0.9 probability that their costs to provide services will rise by 5% and a 0.1 probability that their costs will be the same.This year,they charge each of their 2000 students $3000 to take a full course load and spend $1500 on each student.
-What is the revenue for the college if it experiences an increase in enrollment and an increase in their cost to provide services?
A)$4,000,000
B)$4,400,000
C)$5,465,000
D)$6,600,000

Question

Quizplus · Accepted Answer

If enrollment increases by 10%, the number of students becomes 2200 (2000 * 1.10). With each student paying $3000, the revenue is 2200 * $3000 = $6,600,000.

A Recently-Accredited College of Business Discovers It Is in Dire