Question: Look again at your calculations for question 18 above. Suppose that technological change is expected to reduce costs by 10 percent per year. There will

Look again at your calculations for question 18 above. Suppose that technological change is expected to reduce costs by 10 percent per year. There will be new machines in year 1 that cost 10 percent less to buy and operate than A and B. In year 2 there will be a second crop of new machines incorporating a further 10 percent reduction, and so on. How does this change the equivalent annual costs of machines A and B?

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