28. Mutually exclusive investments and project lives (S6.4) Look again at your calculations for Problem 27. Suppose that technological change is expected to reduce costs by 10% per year.

There will be new machines in year 1 that cost 10% 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% reduction, and so on. How does this change the equivalent annual costs of machines A and B?