What is the difference between Expansion project and Replace

What is the difference between Expansion project and Replacement project?

Solution

In case of an Expansion Project the cash flow generated is in addition to any existing project. Therefore in an expansion project it is the standalone additional project that is evaluated.

On the other hand, in a replacement project an existing cash flow is being considered to be replaced by another one. In such a case both the replaced and replacing projects must be considered before replacement.