Jackie is considering investing monies she plans to get from her aunt and cousin. Her aunt plans to give her $2 million 2 years from now to help her pay for her future college education in 10 years time.

Jackie is currently earning from her part-time employment $20,000 per month that she sets aside to pay for her college education. She plans to work in this job for three years, and then use all her employment income after that to meet her personal expenses. A bank has agreed to give her 6% per annum, payable monthly, on her savings during the 3-year period.

Her cousin has 20,000 stocks that are currently selling for $50 per stock. He plans to give her these stocks, if she sells them and invest the monies in a 8% coupon bond with a 10-year maturity period.

Jackie will have to invest all her funds in the next three years in a E Series bond which have a low risk. The coupon rate on these bonds is 7%. In 7-years the yield to maturity on these bonds is expected to be 7.5%. Her money from her aunt can be invested in a 1-year T-Bill at 6.5% each year. The discount rate for year 1 is 8.5%. In year 2 the discount rate is 8.0%, and for year 3 and thereafter it is 7.5%.

What is the present value of her college fund?