University Endowment Example from lecture Year 1: $100,000,000 endowment Questions: 5% rule allows $5,000,000 to...

 

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University Endowment Example from lecture Year 1: $100,000,000 endowment Questions: • 5% rule allows $5,000,000 to be spent ● 90% of annual earnings allows $9,000,000 to be spent. Must choose lower of these. • Therefore, allowed to spend $5,000,000. $4,000,000 added to principal amount a. What is the beginning endowment amount in year 2? b. Given the university's rules, how much is available to spend in year 2? c. What is the ending endowment amount for year 2? University Endowment Example from lecture Year 1: $100,000,000 endowment Questions: • 5% rule allows $5,000,000 to be spent ● 90% of annual earnings allows $9,000,000 to be spent. Must choose lower of these. • Therefore, allowed to spend $5,000,000. $4,000,000 added to principal amount a. What is the beginning endowment amount in year 2? b. Given the university's rules, how much is available to spend in year 2? c. What is the ending endowment amount for year 2?

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a Beginning endowment amount in year 2 Allowed spending in year 1 5000000 Amount added to pr... View the full answer