Projects are mutually exclusive if picking one project eliminates the ability to pick the other project. This mutually exclusive situation can arise for different reasons. Which of the statements below is NOT one of these reasons?
A) One project will always have a negative NPV.
B) There is a scarce resource that both projects would need.
C) There is need for only one project, and both projects can fulfill that current need.
D) By using funds for one project, there are not enough funds available for the other project.
Answer: A
Explanation: A) Projects are mutually exclusive if picking one project eliminates the ability to pick the other project even if BOTH PROJECTS HAVE POSITIVE net present values. This mutually exclusive situation can arise for one of two reasons: there is need for only one project, and both projects can fulfill that current need; there is a scarce resource that both projects need, and by using it in one project, it is not available for the second project.
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