Indivisible project
Indivisibility changes the way a limited investment budget is allocated. A high ratio of NPV to investment does not guarantee that choosing that project leads to the best total programme, because remaining funds may be unusable. List feasible combinations of independent projects within the constraint and choose the one with the highest total NPV, while respecting any dependencies or mutual exclusivity. For many projects, optimisation software may be appropriate. The budget need not be fully used if the highest-value feasible combination leaves funds unspent.
Worked example
With a $100 budget, A costs $60 and yields NPV $24, B costs $50 and yields $19, and C costs $50 and yields $19. A has the best ratio, but A cannot be combined with B or C. Choosing B + C creates $38, compared with $24 from A.
Common mistake
Using a divisible-project ranking and treating the remaining fraction of an indivisible project as investable.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |