Reference no: EM133430590

The Fosters would like to plan for paying tuition for a College Education for each child for 5 years, each beginning at Age 18, at Maryland State University. 

They do not want to count on qualifying for financial aid to send their children to college but would like to know about financial aid.

Assumptions

            In your research you have discovered that:

• Current Tuition is $ 18,000 per year at MD State.
• While you believe they can earn 8% on their education savings for college, you also know college inflation costs are expected to be 6% annually.
• Briana's Dad set up 529 accounts for Micah and Lilly when they were born.  Micah's has $7,500 in it and Lilly's has $5,500.  He has committed to opening a 529 for Moe this week and investing $3,000. He has indicted he would not be contributing any other money for their education.  The 529 accounts are expected to earn 8%.
• You should be able to perform all calculations using either the Uneven Cash Flow Method or the Traditional Method, found in your textbook.

1. Calculate the cost of a 5-year education for each child. Show the steps performed to get your answer.
2. Calculate the amount they would have to invest today in a lump sum to fully fund college for each in the future.  Show the steps performed to get your answer. In your paper, discuss whether they have the assets to do so.
3. Calculate the annual savings amount required for each if the Fosters chose not to fund education today with a lump sum and were willing to pay through the end of college for each.  Show the steps performed to get your answer.
4. Provide a written explanation of the results, including your assumptions, explained as if you were explaining it to the client. Charts/Tables may help the Fosters understand better.