A child born today will likely not retire until they are 70 years old. Suppose a grandparent wants to create a trust fund for a newborn child today that will provide the child with $1,000,000 cash value at their retirement (70 years from today). They invest today in a fixed rate that promises to pay interest at a rate of 6.0% per year (annually). The trust fund faces an expected tax rate of 25% on the interest income each year over the next 70 years.

How much do the grandparents need to invest in this investment today to leave the grandchild with a trust fund with a cash value of $1,000,000 cash balance (net of taxes) 70 years from now?

If inflation over this period is expected to average 2.0% per year, what is the purchasing power of the $1,000,000 cash balance in this trust fund in 70 years in terms of todays prices ($1,000,000 in 70 years will buy the same amount of stuff as what amount of money today?)

If the grandparents wanted the trust fund to provide the same purchasing power in 70 years as $1,000,000 today, how much would the grandparents have to invest in the investment today?

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