Dictionary of Accounting Terms: mutually exclusive investments
mutually exclusive investments
group of capital budget projects that compete with one another in such a way that the acceptance of one automatically excludes all others from further consideration.Analysis of competing projects using the Net Present Value (NPV) and Internal Rate of Return (IRR) methods may give decision results contradictory to each other. From a practical standpoint, the NPV method generally gives correct ranking to mutually exclusive projects.
