Concept of mutually exclusive investments with examples

By | April 15, 2014

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Mutually exclusive investments refer to the situations in which a company would have two or more projects with differentiated or similar attractiveness but can’t take them all at the same time, for example, a company have project A and project B, it can accept A or B or reject both projects, but it is not possible that it accepts both of them simultaneously (Quiry, Fur, Salvi, Vernimmen & Dallochio 2011, p. 301). For instance, if we choose the project of Hill Top, then because of the constrains such as lack of sufficient project management human resource, we may not have enough of human labor to carry out any of the rest four investment at the same time, in this situation, these five projects would be mutually exclusive investments to each other.