Reference no: EM132499329

Point 1: Stan and Alberta come to your office to plan for their daughter's education when she turns 18 in 8 years. She is currently 10 years old, but they want her to attend a private liberal arts college where the tuition costs $25,000 per year in today's dollars. They believe the general rate of inflation will be 2% and the college rate will be double. You have been managing their investments and they are averaging a 7% return. You calculate that the first year of college tuition will cost $34,214 and that they will need a lump sum of $131,207 at the beginning of the first year of college to pay for the 4 years of college. Stan tells you that he just won the lottery and wants to set aside a lump sum from his winnings today to fund his daughter's education.

Question 1: Based on the figures above, you advise him he will need to set aside what amount of money?