CJ is 40 and wants to retire in 25 years. He expects to live until age 95.

He currently has a salary of $100,000 and expects that he will need about 75% of that if he were retired. He thinks he needs to accumulate $1 million (future dollars) and he will be fine. He currently has $150,000 saved for his retirement that is earning 9%. He is able to save $20,000 towards his retirement. However, he is willing to use some or all of this to fund education for his grandchild, Bob, if and, when his retirement objective appears to be set in terms of funding. Edward, Bob’s dad and CJ’s son, wants Bob to go to school for six years and expect that it will cost $50,000 per year in today’s dollars.

Inflation has been modest at 3%, while education has been increasing at 6% per year.

Edward would like to know how much he should save every year to fund Bob’s college expenses assuming that he can max out his dad’s (CJ) contribution, which would begin in one year and stop when Bob goes to school. Edward would also begin contributing in one year and stop when Bob goes to school and wants to assume he can earn 9% per year. How much does Edward need to save each year? (round answer to nearest $1,000)

a. $0 - Dad has it covered.

b. $4,000.

c. $9,000.

d. $15,000.