What is the difference between mutually exclusive project and independent project?
Understanding Mutually Exclusive Mutually exclusive events are events that can’t both happen, but should not be considered independent events. Independent events have no impact on the viability of other options.
Which project or projects should be accepted if they are mutually exclusive?
If projects are mutually exclusive, the decision rule is to accept the project with the shortest payback period only when the payback period is less than or equal to the maximum payback period.
What are 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 choose between mutually exclusive projects?
Net Present Value Decision Rules
- Independent projects: If NPV is greater than $0, accept the project.
- Mutually exclusive projects: If the NPV of one project is greater than the NPV of the other project, accept the project with the higher NPV. If both projects have a negative NPV, reject both projects.
What is the difference between mutually exclusive and independent events explain by example examples?
Mutually exclusive events cannot happen at the same time. For example: when tossing a coin, the result can either be heads or tails but cannot be both. Events are independent if the occurrence of one event does not influence (and is not influenced by) the occurrence of the other(s).
Can two events be both independent and mutually exclusive?
Yes, there is relationship between mutually exclusive events and independent events. Thus, if event A and event B are mutually exclusive, they are actually inextricably DEPENDENT on each other because event A’s existence reduces Event B’s probability to zero and vice-versa.
What is independent project?
Independent project. A project whose acceptance or rejection is independent of the acceptance or rejection of other projects.
Why are investment projects mutually exclusive?
Mutually Exclusive Projects is the term which is used generally in the capital budgeting process where the companies choose a single project on the basis of certain parameters out of the set of the projects where acceptance of one project will lead to rejection of the other projects.
Can mutually exclusive events be independent?
If two events are mutually exclusive then they do not occur simultaneously, hence they are not independent.
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.
What is the difference between a mutually inclusive and exclusive event?
2 events are mutually exclusive when they cannot both occur simultaneously. 2 events are mutually inclusive when they can both occur simultaneously.