(b) How much should they save annually for the next three years if they want to build up Joseph’s college fund to $20,000, assuming a 7 percent rate of return and ignoring taxes on the interest? (Hint:

Use Appendix Table A.1 or visit the Garman/

Forgue website.)

v

(c) Given their 25 percent marginal tax rate, what is the Hernandezes’ after-tax return and how would that affect the amount they would need to save each year?