Question

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

Answer:

The options are:

• A replacement project
• An expansion project

The correct answer would be:

A replacement project

Explanation:

In this specific case, the company is purchasing new assets in order to replace existing assets whose useful life is over. It is similar to buying a new computer system because the old one is obsolete and doesn't work anymore.

An expansion project would be to buy new cars in order to open new branches.