A Key Difference Between a Replacement Project Analysis and an Expansion

question 16

True/False

A key difference between a replacement project analysis and an expansion project analysis is that the net present value (NPV) technique that is used to evaluate capital budgeting projects should only be used to evaluate expansion projects, whereas either the NPV technique or the internal rate of return (IRR) technique can be used to evaluate replacement projects. 

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Definitions:

Clasts

Fragments or grains of mineral or rock detached from its original position and included within another rock.

Weak Current

A relatively mild or gentle flow of water in a sea, river, or other body of water, which can influence local climates and marine transportation.

Steep Slopes

Land areas where the ground rises sharply, often leading to challenges in construction and increased risk of erosion.

Wind

The flow of gases on a large scale, primarily on Earth's surface, resulting from air moving from high pressure to low pressure areas.