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What are some differences in the analysis for a replacement project versus that for a new expansion project?
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1 of 2Analysis for replacement projects usually come in the form of cost savings as compared to expansion projects where cash flows come in the form of increases in revenues or operating cash flows. Replacement analysis is a bit complex since it is concerned with `incremental cash flows' which includes an extra step of comparing new cash flows from old cash flows, while expansion projects only are concerned with new cash flows.
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