4. You are considering purchasing a new piece of equipment for your factory. The equipment will cost $1,000 and can be used for three years. If you do purchase it, you will earn $350 one year from now, $385 two years from now, and $435.7 three years from now. After that, the machine will generate no more earnings and have no resale value.

a. What is the net present value of this investment if the interest rate is 6 percent? 8 percent? 10 percent?

b. What is the highest interest rate at which you would be willing to buy this equipment?