Margaret is trying to decide whether or not to place funds

Reference no: EM13593542

Margaret is trying to decide whether or not to place funds in a qualified tuition program. Her son will be attending college in 4 years. She is in the 35 % marginal tax bracket and she believes she can earn 7% before tax return on alternative investments. Thus $10,000 will accumulate to $11,948 in 4 years. Margaret expects tuition to increase at the rate of 5% each year to $12,155 in 4 years. Her son will be in the 15% marginal tax bracket in all relevant years. Given these assumptions, should Margaret participate in the qualified tuition program? Explain.

Reference no: EM13593542

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