Question 3 (CLO 3, Marks 10): Alayna and Adam own a three-bedroom home in Georgetown DC, USA. Adam is a partner in the family-owned business. With their daughter, Lizzie, who is seven, Alayna is now staying at home. Their financial situation has been very comfortable until recently. Their visit to Mike Malloy, a family financial planner, led them to become worried about spending too much and not saving enough for both their retirement and their child's education. Their contributions up to now have fallen short of their financial goals because Adam earns $75000 per year, but rising education costs leave them in the red. Adam's financial planner was able to obtain some general information to estimate the amount of money he will need to set aside for future security. Their current retirement plan contributions are sufficient to cover their retirement costs, said the couple. They did not factor in Lizzie's education. Adam graduated from Georgetown University, a university with an extremely high tuition fee of about $28,000 per year. Lizzie's parents hope to send her to Georgetown University when she turns 18. Alayna and Adam don't know whether they will be able to raise enough money when tuition rates continue to rise. Suppose that Georgetown's tuition increases at a seven percent annual rate. When attending Georgetown University, living expenses (room and board) are estimated at $9,000 and other expenses (personal and transportation) at $2,500 per year. The growth rate of these expenses is only expected to be 3% per year. Their goal is to have an automatic withdrawal from their bank account of a predetermined amount each year. In order to gradually liquidate the account, they will make annual payments to Lizzie at the beginning of each year, covering tuition, living expenses, and other expenses during Lizzie's four years in college. Required: 1. How much will the tuition, living and other expenses be per year when Lizzie is ready to attend the University? (Marks 3) 2. Once Lizzie starts college what will her total expenses be in each of her four years? (Marks 4) 3. How much money will Alayna and Adam have to deposit per year to allow Lizzie to attend Georgetown University? (Marks 3)