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.

Visit us at www.mhhe.com/bma Visit us at www.mhhe.com/bma Visit us at www.mhhe.com/bma 286 Part Three Best Practices in Capital Budgeting AppendixLO1