What is meant by mutually exclusive projects?

Question

BlackTom AI · Accepted Answer

Mutually exclusive means that selecting one alternative prevents selecting another; in capital budgeting it refers to projects that compete for the same limited resource so you cannot undertake them both.

1. Relevant knowledge points and concepts
- Capital budgeting often compares projects to decide which to accept.
- Mutually exclusive projects: projects that cannot be undertaken simultaneously because they compete for the same resource, capacity, or objective.
- This contrasts with independent projects, which can be accepted or rejected without affecting one another.

2. Step-by-step reasoning
- Read each option and test it against the definition of “mutually exclusive.”
- Option a: says acceptance of one project precludes accepting others — that matches the core definition.
- Options b, c, d describe other attributes (NPV equality, unavoidable costs, identical IRRs) that do not by themselves make projects mutually exclusive.

3. Intermediate steps (logical elimination)
- Check b: Projects whose NPVs are equal — two projects can have equal NPVs yet still both be undertaken if they don’t compete; equality of NPV is a comparison metric, not exclusivity.
- Check c: Projects which incur unavoidable costs — unavoidable (sunk or fixed) costs do not determine whether two projects can be done together.
- Check d: Projects that have the same IRR — identical internal rates of return is a performance characteristic, not a statement about whether projects exclude one another.

4. Why the correct answer is correct
- Option a precisely captures the idea that choosing one project prevents choosing another, which is the textbook definition of mutually exclusive projects in capital budgeting and decision analysis.

5. Why the other options are incorrect
- b is about a numerical equality (NPV), not exclusivity.
- c concerns cost behavior (unavoidable costs), irrelevant to exclusivity.
- d concerns identical IRR values, which does not imply mutual exclusion.

6. Conclusion
- Therefore the correct answer is a. Projects whose acceptance precludes the acceptance of other projects, which matches the provided answer.

What is meant by mutually exclusive projects?单项选择题

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