Asked by: Sulamita Zaigowpersonal finance financial planning
What is the difference between expansion project and replacement project?
Last Updated: 4th April, 2021
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In this regard, what are some differences in the analysis for a replacement project versus that for a new expansion project?
An expansion project is one in which new sales are generated. A replacement project is one in which an existing machine is replaced with a more efficient one—new sales might not be created, but cash flows improve because of the more efficient machine.
Subsequently, question is, what is an expansion project? Expansion projects are a type of capital investment project, designed to help a company expand and grow. New research and developing means new knowledge that can benefit all markets, companies, and investors. When a company invests in an expansion project, they are typically moving into a new target market.
Furthermore, what is a replacement project?
A replacement project is an undertaking in which the company eliminates a project at the end of its life and substitutes another investment.
What are the types of capital projects?
The most common examples of capital projects are infrastructure projects such as railways, roads, and dams. In addition, these projects include assets such as subways, pipelines, refineries, power plants, land, and buildings. Capital projects are also common in corporations.