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A key difference between a replacement project analysis and an expansion project analysis is that the...

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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Please find below the solution let me know if you need any clarification..

statement is 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

This is because NPV can be use for both replacement as well as expansion project. For replacement incremental cash flow analysis can be done and NPV can be used.

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