Suppose Wilton College, a private sixth form college with excellent International Baccalaureate results, charges a comprehensive annual fee of ₤14,500 for tuition, room and board, and it has capacity for 2,500 students. The admissions department predicts enrollment of 2,000 students for 20X1. Costs per student for the 20X1 academic year are as follows:

The assistant director of admissions has proposed a 2-month advertising campaign using radio and television advertisements, together with an extensive direct mailing of brochures.

1. Suppose the advertising campaign will cost £1.65 million. What is the minimum number of additional students the campaign must attract to make the campaign break even?

2. Suppose the admissions department predicts that the campaign will attract 350 additional students. What is the most Wilton should pay for the campaign and still break even?

3. Suppose a 3-month (instead of 2-month) campaign will attract 450 instead of 350 additional students. What is the most Wilton should pay for the 1-month extension of the campaign and still break even?

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Educational programmes Room Board Variable £4,000 1,300 2,600 £7,900 Fixed £ 4,200 2,200 600 £7,000* Total £ 8,200 3,500 3,200 £14,900