Calculate the present value of the income streams A to E in Table 1 at an 8 percent interest rate and again at a 10 percent rate.

Suppose the investment behind the flow of income in E is a machine that cost $1,235 at the beginning of year one. Would you buy the machine if the interest rate was 8 percent? If the interest rate was 10 percent?

Data from Table 1

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TABLE 1 End of Year 1 2 3 4 5 6 7 A $ 80 80 80 80 1,080 0 0 B $ 80 80 80 80 80 80 1,080 C $ 100 100 1,100 0 0 0 0 D $ 100 100 100 100 100 1,100 0 E $ 500 300 400 300 0 0 0