Mutually Exclusive Projects Are Those Whose Cash Flows Compete with One

question 163

True/False

Mutually exclusive projects are those whose cash flows compete with one another; the acceptance of one eliminates the others from further consideration.

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Definitions:

Initial Value Method

A method of accounting in which an investment is initially recorded at its cost without adjusting for changes in the market value over time.

Net Income

The conclusive profit of a corporation once revenue has had taxes and expenses subtracted from it.

Common Stock

A type of equity security that represents ownership in a corporation, with holders possibly entitled to dividends and voting rights in some corporate matters.

Fair Value

A valuation of an asset or liability determined by the price it could fetch in a coordinated sale or cost of transferring the liability, through a fair transaction involving willing market players.