TOMMY AND KRISTINE KRAFT Introductory Data Tommy and Kristine Kraft want to begin saving for...
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TOMMY AND KRISTINE KRAFT Introductory Data Tommy and Kristine Kraft want to begin saving for college education for their twins, Morgan and McKenna, who are having their first birthday today. The first payment will be made today, and they will begin college on their eighteenth birthday. Tommy and Kristine expect that each child will attend private college for five years with the annual payment due at the beginning of each school year. The current cost of private college education is $50,000 per year per child. It is expected that the cost of college education will increase at an average inflation rate of six percent per year. The CPI is expected to remain at three percent during this period. The Krafts currently have $50,000 invested in a mutual fund that invests in corporate bonds and they have $50,000 invested in an S& P 500 index fund. The $100,000 of investments is dedicated towards education. Tommy and Kristine have answered the following questions regarding their risk tolerance.
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How much money is it going to be in total for both kids attending school for the 5 years of school?
How much are the payments going to be monthly?
How much are the payments going to be monthly?
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