Please use the following info to complete question 2.

INFLOWS Salary - John Salary - Laura Statement of Cash Flow 12/31/2019 Annual $ 135,000 72,500 TOTAL INFLOWS 207,500 Monthly 11,250 6,042 17.292 OUTFLOWS Taxes S Federal income tax - Both State Income Tax - Both Local Income Tax - Both FICA - Both Property Tax 31,591 7,850 4,308 15,874 7,020 66,643 2,633 654 359 1,323 585 5,554 Total Taxes Savings $ 563 302 John 401(k) contribution Laura 403(b) contribution College Savings for Bessie Total Savings 6,750 3,625 4,800 15,175 400 1,265 1,074 696 Debt and Interest Payments Mortgage Payment Car Payment Motorcycle Payment John Student Loan Payment Credit Card Payments Total Debt & Interest Payments 232 12,893 8,347 2,789 3,084 14,400 41,513 257 1,200 3,459 244 472 Insurance Premiums Life Insurance Premium Health Insurance Auto & Motorcycle Insurance Homeowner Insurance Total Insurance Premiums 2,925 5,664 5,760 2,020 16,369 480 HAL.LL 168 1,364 748 417 680 208 340 Ordinary living expenses Food Clothing Utilities Auto maintenance Gas Health Out-of-Pocket Expenses Dining Out Entertainment Familly Gifts Charitable Gifts Childcare Total Ordinary Living Expenses 8,970 5,000 8,160 2,500 4,080 1,500 4,830 7,200 2,500 3,600 9,000 57,340 125 403 600 208 300 750 4,778 TOTAL OUTFLOWS 197,040 16,420 DISCRETIONARY INCOME 10,460 872 Your clients, Laura and John Rockefeller, would now like you to complete their financial planning for this year by working on an education funding strategy for their daughter, Bessie. Recall from your previous work that Bessie is 6 years old. They would also like you to include funding for Laura to return to school in 3 years. Her goal is to attend The University Akron to earn her MBA degree part-time over two years. While she is attending school, Laura will continue to work fulltime at the charity. You also recall that it was Laura's aunt who passed away recently and left her a life insurance benefit of $100,000 that she wants to use towards Bessie's college education. For now, they have left it parked in the separate money market account until they can make a decision about how to use it for that purpose. Laura and John also contribute $300/month to Bessie's account. The balances in Bessie's account is now $5,575. The Rockefeller's want to understand the different account options they have and what the pros and cons are. They want to help Bessie as much as they can now, but they don't want to reduce their retirement goal. They figure that it's much better not to promise more than they can afford and, if all goes well, they can always help with additional education funding later. 2. Develop a comprehensive college education funding plan for Bessie. The Rockefeller's assume that between the life insurance proceeds and Bessie's savings account, they should be close to having what they need without risking much of the portfolio. Additional information regarding Bessie's college funding: o They would like to fund 100% of tuition, fees and books and 50% of room and board and reasonable living expenses for 4 years at The University of Akron. If possible, they want to do this using Bessie's savings account and the life insurance proceeds. Bessie will have to pay the rest through student loans, working, or with her own savings. The Rockefellers want to take advantage of any tax-preferenced accounts available, if possible, but want to avoid putting these funds at much risk as they get closer to when Bessie starts college. If there are any amounts of the college fund remaining when she finishes college, they are willing to allow Bessie access to these funds to help with other expenses she might have after graduating with her undergraduate degree. Based on their risk tolerance and the short-term nature of this goal, you feel they could earn up to a before-tax 6.5% (or an after-tax 5.2%) annual return on the funds invested for education. INFLOWS Salary - John Salary - Laura Statement of Cash Flow 12/31/2019 Annual $ 135,000 72,500 TOTAL INFLOWS 207,500 Monthly 11,250 6,042 17.292 OUTFLOWS Taxes S Federal income tax - Both State Income Tax - Both Local Income Tax - Both FICA - Both Property Tax 31,591 7,850 4,308 15,874 7,020 66,643 2,633 654 359 1,323 585 5,554 Total Taxes Savings $ 563 302 John 401(k) contribution Laura 403(b) contribution College Savings for Bessie Total Savings 6,750 3,625 4,800 15,175 400 1,265 1,074 696 Debt and Interest Payments Mortgage Payment Car Payment Motorcycle Payment John Student Loan Payment Credit Card Payments Total Debt & Interest Payments 232 12,893 8,347 2,789 3,084 14,400 41,513 257 1,200 3,459 244 472 Insurance Premiums Life Insurance Premium Health Insurance Auto & Motorcycle Insurance Homeowner Insurance Total Insurance Premiums 2,925 5,664 5,760 2,020 16,369 480 HAL.LL 168 1,364 748 417 680 208 340 Ordinary living expenses Food Clothing Utilities Auto maintenance Gas Health Out-of-Pocket Expenses Dining Out Entertainment Familly Gifts Charitable Gifts Childcare Total Ordinary Living Expenses 8,970 5,000 8,160 2,500 4,080 1,500 4,830 7,200 2,500 3,600 9,000 57,340 125 403 600 208 300 750 4,778 TOTAL OUTFLOWS 197,040 16,420 DISCRETIONARY INCOME 10,460 872 Your clients, Laura and John Rockefeller, would now like you to complete their financial planning for this year by working on an education funding strategy for their daughter, Bessie. Recall from your previous work that Bessie is 6 years old. They would also like you to include funding for Laura to return to school in 3 years. Her goal is to attend The University Akron to earn her MBA degree part-time over two years. While she is attending school, Laura will continue to work fulltime at the charity. You also recall that it was Laura's aunt who passed away recently and left her a life insurance benefit of $100,000 that she wants to use towards Bessie's college education. For now, they have left it parked in the separate money market account until they can make a decision about how to use it for that purpose. Laura and John also contribute $300/month to Bessie's account. The balances in Bessie's account is now $5,575. The Rockefeller's want to understand the different account options they have and what the pros and cons are. They want to help Bessie as much as they can now, but they don't want to reduce their retirement goal. They figure that it's much better not to promise more than they can afford and, if all goes well, they can always help with additional education funding later. 2. Develop a comprehensive college education funding plan for Bessie. The Rockefeller's assume that between the life insurance proceeds and Bessie's savings account, they should be close to having what they need without risking much of the portfolio. Additional information regarding Bessie's college funding: o They would like to fund 100% of tuition, fees and books and 50% of room and board and reasonable living expenses for 4 years at The University of Akron. If possible, they want to do this using Bessie's savings account and the life insurance proceeds. Bessie will have to pay the rest through student loans, working, or with her own savings. The Rockefellers want to take advantage of any tax-preferenced accounts available, if possible, but want to avoid putting these funds at much risk as they get closer to when Bessie starts college. If there are any amounts of the college fund remaining when she finishes college, they are willing to allow Bessie access to these funds to help with other expenses she might have after graduating with her undergraduate degree. Based on their risk tolerance and the short-term nature of this goal, you feel they could earn up to a before-tax 6.5% (or an after-tax 5.2%) annual return on the funds invested for education