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Chapter 4: Q5DQ (page 405)

What does the term mutually exclusive investments mean?

Short Answer

Expert verified

Mutually exclusive investments are those investment in which acceptance of one investment automatically reject the other investments.

Step by step solution

01

Definition of Net present value

Net present value is technique of capital budgeting that evaluate the value of the all-future cash inflows generated by the company after discounting with discount rate.

02

Mutually exclusive investment

Mutually exclusive investments are the set of the investments in which selection of one means the rejections of others. If a company select to investment in the one investment opportunity and investments are mutually exclusive then it led to rejection of the other investments automatically.

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