How would your answer to Problem 10 change if technological improvements reduce the cost of new BG

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How would your answer to Problem 10 change if technological improvements reduce the cost of new BG production facilities by 3% per year?

Thus a new plant built in year 1 would cost only 25 (1 − .03) = $24.25 million; a plant built in year 2 would cost $23.52 million; and so on. Assume that production costs per unit remain at $65.

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Principles of Corporate Finance

ISBN: 978-0077404895

10th Edition

Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen

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Question Posted: Dec 31, 2012 09:41 AM

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How would your answer to Problem 10 change if technological improvements reduce the cost of new BG

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Assumptions Equipment cost 000s 25000 Units 000s 200 Production Costs 65 Initial Selling Price 100 ...View the full answer

Principles of Corporate Finance

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