Presently college education is increasing at the rate of 7% per year. If currently college cost is running at $21,000 a year, what will the Marcottes need to have saved up for Paloma in 7 years and for Joel in 15 years. Assume that the Marcottes are in the 25% tax bracket, and 6.5% for the State taxes. Furthermore, you can assume that the Marcottes can earn 1% on their investments. You can use a financial calculator or the TVM formulas to find answers to the following: Hints in responding: remember to state your calculator keystroke or show your formula components for full credit assume all rates shown except the inflation rate, are compounded monthly. 682 o For instance, 84 months for Paloma and 180 months for Joel for time periods. o Check to make sure your interest rate is equivalent if youre using a financial calculator!)

How much will they have saved given their current $10,000, and assuming they presently can only save $100 per month for educational funding?

i. By the time Paloma leaves for college?

ii. By the time Joel leaves for college, assuming they do not use savings for Paloma?