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What are independent and mutually exclusive projects? How can you tell the difference?

What are independent and mutually exclusive projects? How can you tell the difference?

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Projects are independent if the cash flows of one are not affected by theacceptance of the other. Conversely, two projects are mutually exclusive if acceptanceof one impacts adversely the cash flows of the other; that is, at most one of two or moresuch projects may be accepted. Put another way, when projects are mutually exclusiveit means that they do the same job. Projects with normal cash flows have outflows, or costs, in the first year (oryears) followed by a series of inflows. Projects with non-normal cash flows have one ormore outflows after the inflow stream has begun.

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