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Replacement and Modernisation decisions are classified as:
ACost reduction decisions
BRevenue expansion decisions
CSpeculative decisions
DMutually exclusive only
Answer & Solution
Correct answer: A. Cost reduction decisions
1. Replacement: replace worn-out plant.
2. Modernisation: replace technologically outdated plant.
3. Both aim to reduce costs/improve efficiency, hence "cost reduction decisions".
_Source: ICAI BoS CA Inter Paper 6A, Ch 7 "Investment Decisions", §4.1_