Education Planning The couple plans to send both Tomas and Maya to Ivy League colleges and expect college expenses to be $50,000 per year (in todays dollars) for each child, for four years of school. The $100,000 in current education savings is in a money market account. The couple would like to take advantage of any gifting opportunities for their children. Alix and Eddy have asked you to determine the following, which will require you to assume an annual tuition inflation rate and an average annual return on investment: The total amount that they must save, in addition to the $100,000 in current education savings, by the time Tomas enters college to have sufficient funds to cover educational expenses for both children Their required annual savings to achieve this funding Your report to the Pereiras should include an explanation of how you arrived at the assumed tuition inflation rate, citing your source(s) of information. Alix and Eddy have also asked for specific education savings and investment vehicle recommendations. These recommendations should include the following: An explanation of the tax implications of the education savings vehicle alternatives Investment recommendation(s) that align with their tolerance and capacity for risk An explanation of how you determined the assumed rate of investment return. The assumed rate of return should be based on your investment recommendation(s) and should be used in the education funding and annual savings calculations that you perform. Tax Planning Alix and Eddy have also asked about tax reduction opportunities. In addition to taking advantage of taxadvantaged vehicles for their retirement and for education savings and gifting opportunities for their childrens education funding, they are interested in understanding the following: Is an LLC the appropriate legal structure for their business as it relates to income taxes? What are the potential tax benefits of charitable contributions? Should they be concerned about being subject to the alternative minimum tax (AMT)? What steps can they take to avoid triggering the AMT? Economic and Market Trends Alix and Eddy have asked you to incorporate the following into your analysis: The impact of stock market underperformance on their savings and investments regarding retirement income. If the annual rate of return on investment is 1.5% less than your assumed rate of return, how will this affect the Pereiras required annual savings for retirement? The impact of greater than anticipated inflation on their savings and investments regarding retirement income. If the inflation rate is 2% more than your assumed inflation rate, how will this affect the Pereiras required annual savings for retirement? The impact of greater than anticipated tuition inflation on their savings and investments regarding education funding. If the tuition inflation rate is 1% more than your assumed tuition inflation rate, how will this affect the Pereiras required annual savings for education? Summary Your final report to the Pereiras should include a one-page conclusion section that incorporates the following: A summary of the key needs/objectives of the client Actionable recommendations for addressing the client needs/objectives A summary and explanation of your assumptions

Using the uneven cash-flow method for multiple children, perform the time value of money calculations to determine the clients educational funding needs. Appendix B: Educational Funding [Provide calculations.]

The reduction of costs associated with the household, entertainment, and debt will be the primary focus of the recommendations for a budget. Appendix C: Budget Recommendations [Provide calculations.]

Financial Statements