Alan inherited $100,200 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper’s education. They have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities.
a) Real estate investment trust (REIT) offering an 8% annual dividend yield and an expected 5% annual increase in the property value.
b) 529 college savings plan offering a 7% annual return on investment.
