When the firm is confronted with a number of projects, some of which are mutually exclusive and some of which are independent, it must first determine the best of each group of mutually exclusive alternatives. The best of the acceptable independent projects can then be selected.

Question

Quizplus · Accepted Answer

It is important to determine the best mutually exclusive alternative first, because selecting one alternative may eliminate the possibility of selecting another alternative. Once the best of the mutually exclusive alternatives is chosen, the firm can then evaluate the independent projects and select the best ones that fit within the constraints of the chosen alternative.

When the Firm Is Confronted with a Number of Projects