I need assistance with this assignment

Capital Budgeting Mini-Case Assignment Instructions

You are the newest member of a non-profit college's Capital Budgeting Committee. The committee is charged with allocating funding for all capital projects during the annual budget process. This year the Board of Trustees has allocated $15 million dollars for capital projects. The college has $2 million of its own funds at a cost of 3.23% and will have to issue a bond for the remaining expenditures related to the projects. The projected 30-year bond rate is 5.07%.

You are an alumnus of the college. While in college, you played lacrosse and have maintained a close relationship with several teammates and the current coach. You also have a daughter who will be attending the college in the fall. She will be enrolling in the Physical Therapy Program. While serving on the Board of Trustees you have developed relationships with many faculty and administrators.

Three areas of the college have submitted requests:

Residential Life

The college currently has 6 dormitories with 200 students housed in each dorm. Recently, there has been a shortage of on-campus housing. As a result, many students have moved off campus. Additionally, on-campus students have been complaining about the poor quality of the bathrooms and dorms in general. The dining commons is also outdated by today's standards. The food service is outsourced to Aramark. Aramark has indicated the company is willing to contribute $1.0 million towards the renovation as they project more students and faculty will utilize the dining services. Currently the college receives 20% of all revenue generated by food service.

New Dormitory- estimated cost $8 million, will increase current on-campus housing of 1200 students by 15%. The dorm is expected to have a useful life of 30 years. Annual housing fees per student are $10,000. The new dorm will not be completed for 2 years. The college will need to expend $5 million the first year and will pay for the remainder of the project in year 2.

Fully Renovate an Existing Dormitory- estimated cost $4.5 million. In order to complete the renovation, the dorm will be closed for 1 academic year. When re-opened the dorm will be apartment style housing and will charge a premium of $2,000 per student.

Renovate the Bathrooms in all Existing Dormitories- estimated cost $3.0 million. The bathroom renovation will be completed over the summer. Residential life and students are strongly advocating for the renovation as repair costs are an on-going issue. Additionally, there has been more than one occasion when the bathrooms in a dorm were inoperable.

Renovate Dining Commons- estimated cost $2.0 million. It is estimated an additional $750,000 annually will be realized by Aramark. The dining commons renovation will be completed over the summer.

Capital Budgeting Mini-Case Page 1 of 3

Athletics

Athletics is a vital part of the campus community. Several of the coaches have voiced concerns that recruiting has become increasingly difficult due to the quality of the current facilities. Many recruits are opting to attend other colleges with better facilities.

New Lacrosse Turf Field- estimated cost $750,000. The lacrosse teams hosts summer camps, which generate approximately $100,000 each summer.

New Buses- estimated cost $500,000 each. The two new buses will eliminate the need to charter buses for the teams. Currently the college spends approximately $60,000 annually on travel fees for the teams.

Wellness Center- estimated cost $20,000,000. The facility will be used by current students, alumni and community members. Alumni will be charged an annual fee of $100. It is estimated that 400 local alumni will utilize the facility. An estimated 200 community members will be charged $200 annually. The Development Department estimates that donations by alumni who were athletes will increase by $200,000 a year. The college will also solicit naming rights for $5,000,000. Admissions believe the new wellness center will have the potential to increase enrollment by 50 students. The project will take 2.5 years to complete. Payments will be spread out of the life of the project.

New Vans- estimated cost $150,000. The vans will be used to drive smaller teams such as tennis to matches.

Academic Affairs

As with other areas on campus a number of academic facilities are outdated. It is difficult for professors to effectively teach with the current equipment and facilities. The current classroom setup allows little ability for collaboration and teamwork. Each classroom is equipped with a computer, however most are outdated and unable to be updated. Additionally, the health science programs (PT, OT, PA) are becoming less competitive due to their outdated simulation labs and general facilities. Faculty have been extremely unhappy with their office space. They have indicated that they are unable to work with students in the current space.

New General Academic Building- estimated cost $10 million. The new academic building will be utilized by all majors on campus. Admissions will highlight the building on tours and during open houses. Admissions feels the new academic building will lead to increased enrollments across campus.

New Health Science Building- estimated cost $15 million. The new building will allow increased enrollment of 100 students combined for the 3 programs.

Renovate Faculty Offices- estimated costs $1 million. Faculty have been very unhappy with administration. It is thought the renovation will lead to increased satisfaction and reduce calls for the unionization of faculty.

Capital Budgeting Mini-Case Page 2 of 3

Update Computer Equipment in Existing Classrooms- estimated cost $1 million. The updated computers are estimated to have a 5 year life and will result in a better learning experience for the students.

Purchase iPads for Faculty and Students- estimated cost $600,000. The iPads are estimated to have a 4 year life. Faculty and students feel strongly the iPads will greatly increase the academic experience for both parties.

The committee will be meeting in a week. You must evaluate each project quantitatively and qualitatively. Evaluate each project on a 10 year time frame as the committee believes time frames beyond that are irrelevant. Once your analysis is complete you must do recommendation for which projects should receive funding. Defend your position in your submission. Your individual submission should be no longer than few pages and include a spreadsheet.

Each submission will be graded on the Excel analysis, recommendation and justification.