Mutually exclusive projects are those projects that can be accepted one at a time. For example, a construction company has availability of labor of 300 workers. If the company has two projects to undertake, each one requires 250 workers at least. So the situation has made the projects mutually exclusive.
There can be other reasons for situations like this like budget constraints or capital rationing situations. In the case of capital rationing, the company may have multiple opportunities but limited funds to accept the projects simultaneously. To evaluate the viability of the project, techniques like NPV are used to prioritize the mutually exclusive projects.
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