Your new baby was born yesterday. To save for her education, youdecide to invest in a 529 plan and will make QUARTERLYcontributions until your child enters the great UNLV when she turns18. That is, you will save for the next 17 years (Or should it be18 years? Think about it), and the contribution will be made at theEND of each quarter. You expect that the 529 plan will return 8.5%per year with quarterly compounding. The current in-state cost(tuition and other expenses, if living with parents) for UNLV isabout $18,086 per year, and you expect your child to spend 4 yearsin college. You expect this cost to go up 4% per year until yourchild finishes college.
1. How much will you need to save per quarter so that your childwill have enough funding for college? (Assume: Tuition payments aremade ONCE per year at the BEGINNING of the year. Your 529 planremains invested until your child finishes college.)
2. Construct a one-way data table to perform a what-if analysisby varying the annual investment return between 5% to 12%, withone-percentage-point increment. That is, how much you need to saveeach quarter to reach your goal if the investment return variesbetween 5% and 12%.
