How would your answer to question 5 change if: Technological improvements reduce the cost of new
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How would your answer to question 5 change if:
• Technological improvements reduce the cost of new BG production facilities by 3 percent 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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The selling price after t 6 now changes because the required investment is 250000001 ...View the full answer
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Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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