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MINI CASE 3 EDUCATION & EDUCATION FUNDING MINI CASE Today is August 15, 2017 WILLIAM AND KATE WINDSOR INTRODUCTORY DATA William and Kare came how to pay for it. They have de a Kare came to you because their oldest child starts college tomorrow and they need help determining for it. They have done a good job of saving for retirement, but have not set aside any funds to pay for for to attend college. They hope their children will qualify for scholarships and/or financial aid from the el government and just submitted their first Free Application for Federal Student Aid (FAFSA). They have not official word yet as to the type and amount of aid for which they may qualify, but the on-line FAFSA or indicated they would not be eligible for Federal Pell Grants or Subsidized Stafford Loans The Windsors believe they may benefit from meeting with a CERTIFIED FINANCIAL PLANNER sitioner. They arrived with the following information for you to assist them in creating a plan to meet their education funding goals. THE FAMILY William and Kate Windsor are both 42 years old and have been married for 22 years. William Windsor is an air- crur mechanic who works full-time for Southeast Airlines (SE) Company, a large publicly owned firm, which offers Mights across the United States, William and Kate met and fell in love in high school while William's father was sta woned at Fort Soldier. William's father was reassigned to another base at the end of William's senior year. William moved with his family but stayed in touch with Kate, and they eventually m Kate worked while William they began their family and Kate be ked while William learned his craft at the local Technical school. After William began working for SE, family and Kate became a stay-at-home mom. Kate returned to work about 8 years ago. She is red by SE as a Gate Attendant. William and Kate have three children. ment needed to fund each child's college education inicase 3 Okulare the end of education return of proach. PV Tyler - 352,162.89 - Trace 549.318.29 8% 9 FV 89 FY PMTO - $11,283.64 PMTO - $7.894.86 annual cost of savings to fund Tyler's and Trace's education expen faces education expense = $19.178.50. Review the proof of education funding schedule. THE UNEVEN CASH FLOW APPROACH TO CALCULATE THE NPV OF 4 YEARS OF EDUCATION EXPENSE Persent value calculation for cost of education for all three children: IOBII Kystrokes 15,000 (CF) 4 ORANGEIN] O [CFil 2 ORANGE[N 15,000 (CF) 3 ORANGE (Nj] 30,000 (CFj] 15,000 (CFj] ORANGE IN 1.08 [+] 1.06 [-] 1 [x] 100 (-) [I/YR ORANGE (NPVj 12C Kontroles 15.000 ( ICF 4 IRI INI 0 [gl (CF) 2 lgl (Nil 15,000 CF 3 lgl [Nil 30 000 CF 15.000 g! (CF) 3 lgl Nil LOS [ENTER] 1.06 [+] 1 - 100 INPVI Answer: 159,835.05 Answer: 159,835.05 Recap The PV of Kylie's four years of education is $58,354. The PV of Tyler's four years of education is $52,163. The PV of Trace's four years of education is $49,318. The total present value of the inflated cost of education for the Windsor children is $159,835. See Education Savings and Withdrawal Schedule. The importance of financial aid for the Windsor children becomes clearer to William and Kate as they realize that watever financial aid they receive will help them close the small annual present value deficit of funds needed to meet their education funding goal and retire at age 64. Mini Case 3: William and Kate Windsor Instructions Follow the steps in the case solution and use the new information below to rework the case. I want to see all the steps involved and submit the solution as if you are showing it to the client. The use of the narrated ppt will get higher marks. Find attached a spreadsheet I created to help understand the math: Please note the following changes: 1 Education inflation is 5% and not 6% 2. The expected rate of return is 7.5% 3. Kylie is 17, Tyler is 11, and Trace is 10. 4. The current cost of education is 14,000 instead of 15,000 Other information remains the same. Education Planning.xlsx (13.98 KB) HD-1080- ad MINI CASE 3 EDUCATION & EDUCATION FUNDING MINI CASE Today is August 15, 2017 WILLIAM AND KATE WINDSOR INTRODUCTORY DATA William and Kare came how to pay for it. They have de a Kare came to you because their oldest child starts college tomorrow and they need help determining for it. They have done a good job of saving for retirement, but have not set aside any funds to pay for for to attend college. They hope their children will qualify for scholarships and/or financial aid from the el government and just submitted their first Free Application for Federal Student Aid (FAFSA). They have not official word yet as to the type and amount of aid for which they may qualify, but the on-line FAFSA or indicated they would not be eligible for Federal Pell Grants or Subsidized Stafford Loans The Windsors believe they may benefit from meeting with a CERTIFIED FINANCIAL PLANNER sitioner. They arrived with the following information for you to assist them in creating a plan to meet their education funding goals. THE FAMILY William and Kate Windsor are both 42 years old and have been married for 22 years. William Windsor is an air- crur mechanic who works full-time for Southeast Airlines (SE) Company, a large publicly owned firm, which offers Mights across the United States, William and Kate met and fell in love in high school while William's father was sta woned at Fort Soldier. William's father was reassigned to another base at the end of William's senior year. William moved with his family but stayed in touch with Kate, and they eventually m Kate worked while William they began their family and Kate be ked while William learned his craft at the local Technical school. After William began working for SE, family and Kate became a stay-at-home mom. Kate returned to work about 8 years ago. She is red by SE as a Gate Attendant. William and Kate have three children. ment needed to fund each child's college education inicase 3 Okulare the end of education return of proach. PV Tyler - 352,162.89 - Trace 549.318.29 8% 9 FV 89 FY PMTO - $11,283.64 PMTO - $7.894.86 annual cost of savings to fund Tyler's and Trace's education expen faces education expense = $19.178.50. Review the proof of education funding schedule. THE UNEVEN CASH FLOW APPROACH TO CALCULATE THE NPV OF 4 YEARS OF EDUCATION EXPENSE Persent value calculation for cost of education for all three children: IOBII Kystrokes 15,000 (CF) 4 ORANGEIN] O [CFil 2 ORANGE[N 15,000 (CF) 3 ORANGE (Nj] 30,000 (CFj] 15,000 (CFj] ORANGE IN 1.08 [+] 1.06 [-] 1 [x] 100 (-) [I/YR ORANGE (NPVj 12C Kontroles 15.000 ( ICF 4 IRI INI 0 [gl (CF) 2 lgl (Nil 15,000 CF 3 lgl [Nil 30 000 CF 15.000 g! (CF) 3 lgl Nil LOS [ENTER] 1.06 [+] 1 - 100 INPVI Answer: 159,835.05 Answer: 159,835.05 Recap The PV of Kylie's four years of education is $58,354. The PV of Tyler's four years of education is $52,163. The PV of Trace's four years of education is $49,318. The total present value of the inflated cost of education for the Windsor children is $159,835. See Education Savings and Withdrawal Schedule. The importance of financial aid for the Windsor children becomes clearer to William and Kate as they realize that watever financial aid they receive will help them close the small annual present value deficit of funds needed to meet their education funding goal and retire at age 64. Mini Case 3: William and Kate Windsor Instructions Follow the steps in the case solution and use the new information below to rework the case. I want to see all the steps involved and submit the solution as if you are showing it to the client. The use of the narrated ppt will get higher marks. Find attached a spreadsheet I created to help understand the math: Please note the following changes: 1 Education inflation is 5% and not 6% 2. The expected rate of return is 7.5% 3. Kylie is 17, Tyler is 11, and Trace is 10. 4. The current cost of education is 14,000 instead of 15,000 Other information remains the same. Education Planning.xlsx (13.98 KB) HD-1080- ad