For example, if a coin is flipped, the two possible results of this action are mutually exclusive, since the appearance of one side will instantly eliminate the possibility for the other side to appear. From a business standpoint, mutually exclusive scenarios are evaluated in capital budgeting situations.
A capital budget is the evaluation of multiple investment opportunities with the goal of picking the most profitable and value-maximizing options. It is possible to evaluate independent projects or mutually exclusive projects. Select basic ads. Create a personalised ads profile.
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What Is Mutually Exclusive? Key Takeaways Events are considered to be mutually exclusive when they cannot happen at the same time. The concept often comes up in the business world in the assessment of budgeting and dealmaking. If considering mutually exclusive options, a company must weigh the opportunity cost, or what it would be giving up by choosing each option. The time value of money TVM is often considered when deciding between two mutually exclusive choices.
Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Opportunity cost is the potential loss from a missed opportunity—the result of choosing one alternative and forgoing another. Love words? Need even more definitions? Homophones, Homographs, and Homonyms The same, but different. Merriam-Webster's Words of the Week - Nov.
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