3. [4 points total] You are production engineer at a baking facility that produces glazes and fillings for all major doughnut companies in the US. You are planning to increase production and therefore looking at new equipment that will help increase capacity. You team has come up with three alternative projects that would provide the needed capacity. The options are: Project 1: Pick Heater To increase the water temperature faster, therefore clean all equipment and lines faster. Project 2: Canner To automatically can the finished product (i.e. place it in the final saleable container) Project 3: Second production line - A duplicate set of equipment to expand production capacity. Cash flows associated with each of these machines are shown in the table below. Assume that the prevailing interest rate, regardless of which project is selected is 6% per year. 0 -87,750 Project 2 -52,500 Project 3 | -40,000 1 0 1,000 0 2 2,000 2,000 -5,000 3 5,000 5,000 -5,000 4 5,000 8,000 10,000 5 12,000 18,000 10,000 6 7 18,000 24,000 22,000 24,000 14,000 | 14,000 8 9 46,000 60,000 24,000 | 26,000 24,000 24,000 10 80,000 28,000 30,000 a) [2 points] Since your team isn't sure how to proceed, you have suggested that you set a threshold for recovery of the initial investment. You have agreed that, to be considered further, each option should have a conventional payback period of 7 years or less. Using this approach which of these installation should be considered further and which should be eliminated from all further consideration? Support your answer by calculating the conventional payback period for each project. b) [2 points) After some consideration your team wanted to improve their machine screening process. They have decided that to be considered further, machine should have a discounted payback period of 7.25 years or less. If this was the case, which of these installations should be considered further and which should be eliminated from all further consideration? Support your answer by calculating the discounted payback period for each machine. Note: Consider ONLY those options that met your conventional payback period calculations in part a in this question. 3. [4 points total] You are production engineer at a baking facility that produces glazes and fillings for all major doughnut companies in the US. You are planning to increase production and therefore looking at new equipment that will help increase capacity. You team has come up with three alternative projects that would provide the needed capacity. The options are: Project 1: Pick Heater To increase the water temperature faster, therefore clean all equipment and lines faster. Project 2: Canner To automatically can the finished product (i.e. place it in the final saleable container) Project 3: Second production line - A duplicate set of equipment to expand production capacity. Cash flows associated with each of these machines are shown in the table below. Assume that the prevailing interest rate, regardless of which project is selected is 6% per year. 0 -87,750 Project 2 -52,500 Project 3 | -40,000 1 0 1,000 0 2 2,000 2,000 -5,000 3 5,000 5,000 -5,000 4 5,000 8,000 10,000 5 12,000 18,000 10,000 6 7 18,000 24,000 22,000 24,000 14,000 | 14,000 8 9 46,000 60,000 24,000 | 26,000 24,000 24,000 10 80,000 28,000 30,000 a) [2 points] Since your team isn't sure how to proceed, you have suggested that you set a threshold for recovery of the initial investment. You have agreed that, to be considered further, each option should have a conventional payback period of 7 years or less. Using this approach which of these installation should be considered further and which should be eliminated from all further consideration? Support your answer by calculating the conventional payback period for each project. b) [2 points) After some consideration your team wanted to improve their machine screening process. They have decided that to be considered further, machine should have a discounted payback period of 7.25 years or less. If this was the case, which of these installations should be considered further and which should be eliminated from all further consideration? Support your answer by calculating the discounted payback period for each machine. Note: Consider ONLY those options that met your conventional payback period calculations in part a in this