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.
The wooden bridge and the steel bridge are mutually exclusive projects. The investor-entrepreneur can only build one bridge.
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?
Table 2 considers two mutually exclusive projects with different cash flow profiles.
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.
When comparing among
mutually exclusive projects, the highest NPV wins!
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.
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.