Make budget and calculate net spending as percentage. 1. Endowment has a current value of 1 Billion,
Question:
Make budget and calculate net spending as percentage.
1. Endowment has a current value of 1 Billion, all are discretionary funds.
2. A consultant is hired to make recommendations to investment committee. The consultant earns 5 basis points per year for services.
3. Finance committee has costs of 30 basis points per year for salaries and record keeping.
4. Budget cycle is July 1 to June 30.
5. As a consultant, I am required to make forecasts for the next 1 year and 5 years.
6. Endowment needs to generate $75 million in withdrawals for operating expenses. withdrawal amounts are expected to increase by the rate of inflation plus 250 basis points.
7. University needs to withdraw $20 million from endowment at the mid point of year 2 to build Medical School.
8. Endowment includes $60 million in real estate that has been donated and it generates net cash flows of 900 basis points of the value of the physical real estate per year.
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder