Homework 3 Due date: 10/12/2020 Name: Problem 1 A manufacturer of digital freeze-drying systems can reduce product recalls by 10% if it purchases new packaging equipment. If the cost of the new equipment is expected to be $40,000 four years from now, how much could the company afford to spend now (instead of 4 years from now) if it uses a minimum attractive rate of return of 12% per year? Prior to solving for the initial cost of the packaging equipment, identify the engineering economy symbols with their corresponding values and draw the cash flow diagram Problem 2 A bioreactor for the fermentation of biofuel precursor is expected to cost $250,000 three years from now, $200,000 five years from now, and another $170,000 six years from now. If the biofuel company wants to set aside enough money now to cover these costs at a rate of 18% per year compounded bi-monthly? a) Draw the cash flow diagram b) What is the effective rate based on yearly and bi-monthly c) Determine how much must be invested now to cover the cost at the effective interest rate Homework 3 Due date: 10/12/2020 Name: Problem 1 A manufacturer of digital freeze-drying systems can reduce product recalls by 10% if it purchases new packaging equipment. If the cost of the new equipment is expected to be $40,000 four years from now, how much could the company afford to spend now (instead of 4 years from now) if it uses a minimum attractive rate of return of 12% per year? Prior to solving for the initial cost of the packaging equipment, identify the engineering economy symbols with their corresponding values and draw the cash flow diagram Problem 2 A bioreactor for the fermentation of biofuel precursor is expected to cost $250,000 three years from now, $200,000 five years from now, and another $170,000 six years from now. If the biofuel company wants to set aside enough money now to cover these costs at a rate of 18% per year compounded bi-monthly? a) Draw the cash flow diagram b) What is the effective rate based on yearly and bi-monthly c) Determine how much must be invested now to cover the cost at the effective interest rate