ack and Jill Moore have just inherited a substantial amount of money and they want to put aside enough of it in a special investment account earmarked for their three children's university education. Their children, David, Joe, and Janet, are expected to start university in 4 years, 5 years, and 8 years, respectively. The Moores' plan to support each child for four years of university. Each child needs $12,000 per year in tuition fees, books, room and board, and other sundry expenses. Attending the local university and commuting from home will cut that to $5,000 per year. Assume payments are made at the start of each school year. If the expected rate of return on investment is 10% and the expected rate of inflation is 3%, how much must they set aside nor. (a) if all three children go to out-of-town universities? (b) if David goes out of town and Joe and Janet attend the local university? (c) if all three children stay home and attend the local university?
Jack and Jill Moore have just inherited a substantial amount of money and they want to put aside enough of it in a special investment account earmarked for their three children's university education. Their children, David, Joe, and Janet, are expected to start university in 4 years, 5 years, and 8 years, respectively. The Moores' plan to support each child for four years of university. Each child needs $12,000 per year in tuition fees, books, room and board, and other sundry expenses. Attending the local university and commuting from home will cut that to $5,000 per year. Assume payments are made at the start of each school year. If the expected rate of
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