CFA Practice Question

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CFA Practice Question

A replacement project is a project where a firm invests in ______.

A. new assets
B. replacing a productive asset
C. developing a new product line
Correct Answer: B

Replacement projects deal with the investment in new assets that will replace old assets the firm already owns.

User Contributed Comments 3

User Comment
jallado0 to replace a productive asset??
vvenkatr A firm produces widgets using machine A. Technology improves, and a new machine that can halve the production costs comes into the market. In this case, the firm could certainly consider replacing productive asset A by the new machine. "productive asset" = asset that produces
Sorcerer A - Expansion project
B - Repalcement project
C - Expansion project

@jallado0: Here,we have to take the best possible answer. In this case, it happens to be B.
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