Two types of capital projects that a firm may consider are:
- Expansion Projects: these are projects where the firm seeks to profitably increase sales of current products or introduce new products into the market.
- Replacement Projects: these are projects where the firm must either: replace worn out equipment or invest in new equipment that is expected to lower current production costs and/or increase current sales.
Calculating Cash Flows for Expansion Projects
Calculating Cash Flows for Replacement Projects