Ben recently made a one-time investment of $20,000 in the Florida 529 educational savings plan for his three-year-old son, Mitch. Assume the plan yields a constant 6 percent return for the next 15 years.
a. How much money will be available for Mitch after taxes when he begins college at age 18?
b. Assume, instead, that when Mitch turns 18, he decides to forego college and spend his time as a traveling artist. If Mitch's parents give him the amount in the 529 plan to pursue his dreams, how much will he keep after taxes if his marginal tax rate is 10 percent?