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John Moffat.
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Nikitagarwal
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Dysxa Co has limited the capital investment funds in its Delta Division to $7m. The division has
identified five possible investment projects, as follows:
Project Initial investment Net present value
A $3,000,000 $6,000,000
B $2,000,000 $3,200,000
C $1,000,000 $1,700,000
D $1,000,000 $2,100,000
E $2,000,000 $3,600,000
These projects are divisible and cannot be deferred or repeated. Projects C and E are mutually
exclusive.When they say mutually exclusive then is it mean that either of them will be done with higher profitability index.?
John Moffat
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Mutually exclusive means that if they do C then they cannot do E, or if they choose to do E then they cannot do C.
They cannot do both of those projects.
Nikitagarwal
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