Independent project
An independent project
is one where the decision to accept or reject the project has no effect on any
other projects being considered by the company. For example the decision to
replace a company's computer system would be considered independent of a decision
to build a new factory.
Mutually-exclusive Projects
A mutually-exclusive
project is one where acceptance of such a project will have an effect on the
acceptance of another project. In mutually exclusive projects, the cash flows
of one project can have an impact on the cash flows of another. Starbucks
decision to buy Teavana will most certainly have a profound effect on the
future cash flows of the coffee business as well as influence the decision
making process of other future projects undertaken by Starbucks.
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