$3.$ Presently college education is increasing at the rate of $8\%$ per year. If currently

college cost is running at $$28,000$ a year, what will the Marcottes need to have

saved up for Paloma in $7$ years. Assume that the Marcottes are in the $25\%$ tax

bracket, and $6\mathrm{.}5\%$ for the State taxes. Furthermore you can assume that the

Marcottes can earn $3\%$ on their investments. You can use a financial calculator or

the TVM table or TVM formulas to find answers to the following:

$682$

Hints in responding:

$$ When considering the information provided, consider their savings outside of

retirement as after tax. $.$

$$ remember to state your calculator keystoke or show your formula components for

full credit

$$ assume all rates shown except the inflation rate, are compounded monthly.

o For instance, $84$ months for Paloma time period.

o Check to make sure your interest rate is equivalent if you$$re using a

financial calculator!$)$

a$.$ How much will they have saved for Paloma assuming they presently can

only save $$75$ per month per child for her educational funding?

i$.$ By the time Paloma leaves for college?

$4.$ Using the information from question $3..$ What will be their college savings

shortfall $($or surplus$),$ for Paloma? $($Again$,$ show the calculations for full credit$)$

i$.$ How much would college cost be for Paloma$$s first year?

ii$.$ What is Paloma$$s college cost shortfall? $($or surplus$)(3$a$.$i$-4.$i$.)$

iii. What are some saving programs and tools that the Marcottes might

consider to make up the shortfall and to eventually prepare for

Joel?