Assets

Savings (cash/money markets) $350,000 Investments (mutual funds) $2,500,000 Educational savings $100,000 Home $3,000,000 Rental property $500,000 Autos $200,000 Personal property $250,000 Life insurance $1,000,000 Total $7,900,000 Liabilities Credit cards $75,000 Car loans $100,000 Home mortgage $1,000,000 Personal line of credit $125,000 Total liabilities $1,300,000 Equity $6,600,000 Total Liabilities and Equity $7,900,000 Income Statement Income E & A, LLC income $2,000,000 E & A, LLC expenses $1,500,000 Rental income $24,000 Investments $50,000 Total Income $574,000 Expenses Credit card payments $45,000 Car loan payments $18,000 Mortgage payments $60,000 LOC payments $15,000 Household $80,000 Entertainment $65,000 Gasoline $6,000 Home insurance $10,000 Home maintenance $25,000 Health insurance $12,000 Property taxes $30,000 Rental property insurance $2,000 Rental property maintenance $6,000 Income taxes (effective rate: 26%) $149,240 Total Expenses $523,240 Net Income $50,760

Assuming 2% inflation and 6% return on investments.

The couple plans to send both Tomas and Maya to Ivy League colleges and expect college expenses to be $50,000 per year (in todays dollars) for each child, for four years of school. The $100,000 in current education savings is in a money market account. The couple would like to take advantage of any gifting opportunities for their children. Alix and Eddy have asked you to determine the following, which will require you to assume an annual tuition inflation rate and an average annual return on investment: The total amount that they must save, in addition to the $100,000 in current education savings, by the time Tomas enters college to have sufficient funds to cover educational expenses for both children Their required annual savings to achieve this funding

Using the uneven cash-flow method for multiple children, perform the time value of money calculations to determine the clients educational funding needs. Using Net present value (NPV) of the total funding need?

Annual savings required to meet the education goal?