Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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: (remember to state your calculator keystrokes or show your formula components for full credit)

a. 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?
iii. How much would college cost be for Paloma's four years?
iv. How much would college cost be for Joel's four year's?
v. What is Paloma's college cost shortfall? (iii. - i.)
vi. What is Joel's college cost shortfall? (iv.-ii.)
vii. What are some saving programs and tools that the Marcottes might consider for these goals?

Step by Step Solution

3.36 Rating (143 Votes )

There are 3 Steps involved in it

Step: 1

The detailed answer for the above question is provided below a How much will they have saved given their current 10000 and assuming they presently can only save 100 per month for educational funding i ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and managerial accounting

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

1st edition

111800423X, 9781118233443, 1118016114, 9781118004234, 1118233441, 978-1118016114

More Books

Students also viewed these Finance questions

Question

Can a person exercise too much? Explain your answer.

Answered: 1 week ago