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Mutually Exclusive Investment Decision
(redirected from Mutually Exclusive Projects)

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Mutually Exclusive Investment Decision
The decision to make an investment that prevents making a different investment. Some investment decisions are mutually exclusive by nature; for example taking a long position in a stock precludes taking a short position the same stock at the same time. Others are mutually exclusive circumstantially; for example, if one only has so much money to invest and buys stocks A, B, and C, there may not be enough left over to buy stock D. See also: Opportunity cost.


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IRR has also been criticised because it doesn't always correctly evaluate mutually exclusive projects or ensure the best allocation of resources when capital rationing occurs.
The course also discusses the project interaction situations such as capital rationing, mutually exclusive projects, among others.
 
 
 
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