13. The Theater NYC (TNYC) has a term loan of $500,000 with Money Bank. It is payable over 10 years at an interest rate of 6.5%. TNYC is presently undergoing a fund-raising feasibility study to determine if it can raise $6,200,000 over three years. If the campaign is successful, it will create $3,000,000 in endowment funds; renovate the stage in their theater, estimated to cost $2,514,000; pay off the term loan; and, pay the cost of the fund-raising campaign estimated to be around 3% of the amount raised.

A. If TNYCs campaign is successful, how much will the capital campaign cost?

B. How much annual income will the endowment generate if it averages 6% growth/year?

C. If inflation averages 2.1% growth/year, how much endowment income should the board permit to be used for annual operations, and why?

D. If the feasibility study suggests that because of economic conditions the board should wait two years before initiating the campaign, how much interest and principle will the opera pay on the term loan during this period?