The BCR is an input to project prioritization, the NPV is applied to mutually exclusive project selection, and the FYRR is used to estimate optimal project timing.
Therefore selecting the mutually exclusive project option with the highest NPV may not result in the socially optimal outcome if the opportunity cost of capital is uncertain and not entirely reflected by the discount rate.
NPV is typically better when comparing mutually exclusive project alternatives.
When comparing among mutually exclusive projects, the highest NPV wins!
Engelhardt does not distinguish between independent projects and mutually exclusive projects
. This is clear in table 3 of his comment Engelhardt (p 523) says, "if the interest rate is less than 23.38 percent, then both Project 1 and Project 2 are undertaken." Engelhardt does not realize that he is dealing with mutually exclusive projects
Payback cannot evaluate mutually exclusive projects
because it doesn't consider the whole project period--would it be better to accept a project with a longer payback period that provides higher returns after that point than to accept a project with a shorter payback period but lower returns?
For this reason we talk about three categories of projects: self-complementary (choice of one depends on the choice of another project) and exclusive (mutually exclusive projects
) (Ispas & Cotet, 1998).
Whereas Cineaste may rationalize the controversy surrounding Lee's film by noting, "Malcolm X is not the sort of person Hollywood biopics normally celebrate" (Crowdus 4), Baldwin was not content to separate inclusion and transformation into mutually exclusive projects
. In the aftermath of the exhilarating gains of Civil Rights and amidst a nascent Black Arts movement, Baldwin entered Hollywood in 1970 with the notion that cinema had the power to transform a generation hypnotized by the white supremacist fantasies of D.
Deconstruction and reconstruction are not, as Matthews and Young (and Smart) seem to think, mutually exclusive projects
. It would be a shame if the modern/postmodern dualism which has clogged much of the social sciences for the best part of the last decade had now to be replayed to its inconclusive end in criminology.
I am also accused of not distinguishing between independent projects and mutually exclusive projects
. To this I plead guilty--because in that regard, I was following Keynes's lead.
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.
Wherever a project shows a positive NPV it will also have an MGR greater than zero and therefore support the same accept/reject decision for mutually exclusive projects