(c) As part their responsible business initiative, Micron Industries wants to establish a trust fund to assist under-privileged students in their local community in pursuing 4-year undergraduate degree programs. The tuition fee is estimated to be $35,000 for the first year but is expected to increase by 5% per year thereafter. Required: i. Assuming this trust fund will earn 7.5% interest per annun, calculate the amount required at the start of one student’s college journey to fund his/her full tuition. ii. If Micron Industries would like to sponsor the first student in two years’ time and they currently have $125,000 earmarked for investment, what annual rate of interest is required to accumulate the amount needed as calculated in part (i)?
(c) As part their responsible business initiative, Micron Industries wants to establish a trust fund to assist under-privileged students in their local community in pursuing 4-year undergraduate degree programs. The tuition fee is estimated to be $35,000 for the first year but is expected to
increase by 5% per year thereafter.
Required:
i. Assuming this trust fund will earn 7.5% interest per annun, calculate the amount required at the start of one student’s college journey to fund his/her full tuition.
ii. If Micron Industries would like to sponsor the first student in two years’ time and they currently have $125,000 earmarked for investment, what annual rate of interest is required to accumulate the amount needed as calculated in part (i)?
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