How do you choose an independent project?

Net Present Value Decision Rules

1. Independent projects: If NPV is greater than $0, accept the project.
2. Mutually exclusive projects: If the NPV of one project is greater than the NPV of the other project, accept the project with the higher NPV. If both projects have a negative NPV, reject both projects.

What are the differences with independent projects mutually exclusive projects and contingent projects?

What are the differences between capital projects that are independent, mutually exclusive, and contingent? On the other hand, projects are mutually exclusive if the acceptance of one implies rejection of the other. Contingent projects are those in which the acceptance of one project is dependent on another project.

How do you know if a project is mutually exclusive or independent?

Projects are independent if the cash flows of one are not affected by the acceptance of the other. Conversely, two projects are mutually exclusive if acceptance of one impacts adversely the cash flows of the other; that is, at most one of two or more such projects may be accepted.

What do mean by independent and mutually exclusive projects in capital budgeting?

Projects are independent if the cash flows of one are not affected by the acceptance of the other. In capital budgeting, mutually-exclusive projects refer to a set of projects out of which only one project can be selected for investment.

What is a complementary project?

Complementary project proposal means a proposal for a project which involves coordination with one or more other projects for which funding was awarded under this program in a previous fiscal year, or for which funding is requested under this program in the current fiscal year.

What are the capital budgeting methods?

There are several capital budgeting analysis methods that can be used to determine the economic feasibility of a capital investment. They include the Payback Period, Discounted Payment Period, Net Present Value, Profitability Index, Internal Rate of Return, and Modified Internal Rate of Return.

What are two substitute goods?

Below is a list of some common substitute goods:

• Coke & Pepsi.
• McDonald’s & Burger King.
• Colgate & Crest (toothpaste)
• Tea & Coffee.
• Butter & Margarine.
• Kindle & Books Printed on Paper.
• Fanta & Crush.
• Potatoes in one Supermarket & Potatoes in another Supermarket.