Which of the following best describes incremental cash flows? Incremental cash flows are not relevant because they will occur whether or not the project is accepted. They are the difference between the cash flows the firm will have if it accepts the project versus the cash flows it will have if it rejects the project. Understanding the nature of projects Capital budgeting analysis often involves decisions related to expansion projects and/or replacement projects. Based on your understanding of expansion and replacement projects, complete the following: 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?