Question

1)As director of development for Southern Ohio State University (SOSU), you have been charged with developing a plan to endow 12 men’s basketball scholarships. The current cost of a scholarship athlete is $45,000. With tuition expenses expected to increase at a 5.5% rate annually and the endowment’s return expected to average 7% over time, calculate the total amount that will have to be raised to fully endow the 12 scholarships.

2)Based on your work in Problem 1, develop a major gifts table for the capital campaign. Explain the method you used to construct the chart.

Answer 1

Answer-1= As per the question we have to calculate total amount that will have to be raised for endow 12 scholarships,the information given as follow :-

a) Number of Men for scholarship is 12

b) Current cost of scholarship athlete is $45000

c) Endowment return is 7% over time

d) tuition expenses expected to increase by 5.5% annually ( we assume till infinity 5.5% annually increases, because question does not specify periodicity)

Final answer steps :=

Step -1 It means University have required to give total scholarship is = $45000@12 = $540000

Step-2 So, we have required total amount is $540000 and if we earn 7% overtime then net amount required is = $540000 divided by 107% = $504672.90

Step-3 Amount is required to be raised is = $504672.90 +5.5% =$532429.90