What are the mutually exclusive projects?

Mutually exclusive projects are capital projects which compete directly with each other. For example, if a manager has to make a choice strictly between undertaking either project X or Y, but not both of them concurrently, then projects X and Y are said to be mutually exclusive.

How do you know if a project is mutually exclusive?

Methods used by Companies to Evaluate Mutually Exclusive Projects

NPV refers to the present value.
It is nothing but the discount rate that would make all of the present values of cash flows equal to the initial outlay.
The payback Period.
One drawback of the payback period.
Calculation of NPV.

How do you compare mutually exclusive projects of unequal life?

The equivalent annual annuity approach is one of two methods used in capital budgeting to compare mutually exclusive projects with unequal lives. The EAA approach calculates the constant annual cash flow generated by a project over its lifespan if it was an annuity.

What is independent projects and mutually exclusive projects?

Unlike independent projects, in which a decision to invest in one project has no bearing on the decision to make investment in another, investment decision in case of mutually exclusive projects is dependent on the relative merit of the projects.

Is a deck of cards mutually exclusive?

If we have a single standard deck of 52 cards, which of the following pairs of events are mutually exclusive? Standard playing cards. Drawing a red card and drawing a club cannot occur at the same time, because all clubs are black; therefore, the outcomes drawing a red card and drawing a club are mutually exclusive.

What is an example of mutually exclusive?

Mutually exclusive events are events that can not happen at the same time. Examples include: right and left hand turns, even and odd numbers on a die, winning and losing a game, or running and walking. Non-mutually exclusive events are events that can happen at the same time.

How do you compare two NPV projects?

When comparing two or more projects, the one with the highest NPV is typically the best choice. So the simplest way to apply the net present value method to capital rationing is to determine the NPV of each project and then list them in order from highest NPV to smallest.

Is mutually exclusive the same as independent?

The difference between mutually exclusive and independent events is: a mutually exclusive event can simply be defined as a situation when two events cannot occur at same time whereas independent event occurs when one event remains unaffected by the occurrence of the other event.

Are E and F mutually exclusive?

Definition: Two events E and F are said to be mutually exclusive if the two events have no outcomes in common, that is E \ F = 0. If E and F are any two events of an experiment, then P(E [ F) = P(E) + P(F) P(E \ F).

Are dice rolls mutually exclusive?

A pair of dice is rolled. The events of rolling a 5 and rolling a double have NO outcomes in common so the two events are mutually exclusive.

What is an example of a mutually exclusive project?

For example, assume a company has a budget of $50,000 for expansion projects. If available Projects A and B each cost $40,000 and Project C costs only $10,000, then Projects A and B are mutually exclusive. If the company pursues A, it cannot also afford to pursue B and vice versa. Project C, however, is independent.

What is mutual exclusivity in capital budgeting?

The concept of mutual exclusivity is often applied in capital budgeting. Companies may have to choose between multiple projects that will add value to the company upon completion. Some of these projects are mutually exclusive. For example, assume a company has a budget of $50,000 for expansion projects.

What are mutually exclusive and independent events?

Mutually exclusive events may also be considered independent events. Independent events have no impact on the viability of other options. For a basic example, consider the rolling of dice.