Question

Ideally, capital budgeting analysis should take cash flows into account . Understanding the nature of projects Capital budgeting analysis often involves decisions related to expansion projects and/or replacement projects. Based on your understanding of expansion and replacement projects, answer the following: A rental car company bought a new fleet of midsize cars and sold off its old midsize cars because they had too many miles on them. Which type of project would this be considered

Answer 1

Replacement project

Step-by-step explanation:

A Replacement project is a project where to initial investment is disposed of and new investments are made to replace the investments disposed of.

Here the old cars are replaced with new ones. So, it is a replacement project

An expansion project is a project undertaken to increase the capacity or reach of a firm.