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Stage 2 (2021) “Investing in the Future”

Professional Excel Templates for your Business

Stage 2 (2021) "Investing in the Future"

Stage 2 (2021) "Investing in the Future"

This is an actual case from the Financial Modeling World Cup 2021, Stage 2 (Feb 19-22) competition. It can be used to expand your knowledge of financial modeling and train for future FMWC Stages.

Case description:

The objectives of the case are to manage a bequest of $5,000,000 left by a wealthy great-aunt for creating a legacy by providing bursaries to promising scholars at a nearby school. The investment strategy should focus on longevity and ensure that the capital is preserved, and the interest yields higher returns than the education price index to support scholars for the duration of their time at the school. It is necessary to find the optimal portion of interest and capital to disburse from the long-term investment account to maximize the number of scholars receiving bursaries over the long term. Additionally, it is required to ensure that at least 50% of the bursary recipients are boarders, and the bursary should cover the cost of a scholar’s full 5-year schooling career.

The case presents the challenge of managing the bequest by investing it in a long-term investment account and disbursing a portion of the interest earned in a given year to a current account (the “bursary account”). The bursary account can be used to provide bursaries to scholars, but the bursaries should not be funded directly from the long-term investment account. The plan requires calculating the full cost of providing a bursary to a scholar for their 5-year schooling career, including boarding fees. The optimization process involves finding the optimal portion of interest and capital to disburse from the long-term investment account to maximize the number of scholars receiving bursaries over the long term while ensuring that the capital is preserved.

The downloadable file consists of the following:
-Task: Excel file with given case assumptions; PDF file with Case Materials; PDF file with Questions
-Solution: Excel file with the full Solution Model; PDF file with correct Answers in Bold

This model awarded 350 points + 100 Extra points for the bonus questions, while the whole 2h Stage allowed to earn 1,150 points in total.

For your questions/suggestions/consideration please reach out to the Organizing Committee of the Financial Modeling World Cup at info@fmworldcup.com
You can also buy tickets to participate in the future FMWC Stages at https://fmworldcup.com/shop/

 

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