Question

The parents of a friend need your advice. They currently own property in Northern Wisconsin. They bought it for $225,000 (10 years ago) in the hopes of using it to pay for their son’s college expenses. In a tough market, they just received an offer to sell it to a developer for $200,000. Their son is only 14 years old today, with four years until he goes to college. If they sell the property immediately, they would invest the funds and earn 3% interest (on a quaterly basis). If they estimate they will need $350,000 saved in 4 years to reach their saving goal, will they achieve it? By how much will they exceed it or fall short?

Answer 1