Final answer:
By calculating initial and new net incomes with an increased number of students by 20%, we determined that the net income of Tutor, Inc. would increase by approximately 30%, which corresponds to option c. 30%.
Step-by-step explanation:
To answer how an increase in the number of students affects the net income in a company where all expenses are fixed, we must first calculate the initial net income and then see how an increase of 20% in the number of students impacts that net income. Tutor, Inc. charges $330 per student and expects to serve 1,150 students, which results in initial revenues of $330 * 1,150 = $379,500. With fixed costs at $125,000, the initial net income is $379,500 - $125,000 = $254,500. A 20% increase in the number of students would mean the company serves 1,150 * 1.20 = 1,380 students, resulting in increased revenues of $330 * 1,380 = $455,400. The fixed costs remain the same, so the new net income is $455,400 - $125,000 = $330,400.
Now, to find the percentage increase in net income, we calculate (($330,400 - $254,500) / $254,500) * 100% = (Approximately 29.8%), which we can round to 30%. Hence, the correct answer to the question, 'If the estimated number of students increase by 20%, net income will increase by what percent?' is option c. 30%.