Two independent situations follow. Interest is compounded annually. Solve for the appropriate interest rate using a financial calculator or a spreadsheet.
a. A college student wishes to purchase a new car. In order to pay for the vehicle, the student borrows $ 15,000 from his parents today (beginning of the current year). Starting at the end of the current year, he must make fifteen equal annual payments of $ 1,200 each. What interest rate is the student paying his parents?
b. A finance professor wishes to invest $ 50,000 at the end of this year. He wants his investment to grow to $ 200,000 in 20 years. At what interest rate must the professor invest to reach his goal?