5 What is the difference between mutually exclusive alternat
5. What is the difference between mutually exclusive alternatives and independent projects? (10 points)
Solution
An Independent Project is a project whose cash flows are not affected by the accept/reject decision for other projects. Thus, all Independent Projects which meet the Capital Budgeting critierion should be accepted. Mutually Exclusive Projects are a set of projects from which at most one will be accepted.
