In mutually exclusive projects, project which is selected for comparison with others must have
A
higher net present value
B
lower net present value
C
zero net present value
D
all of above
Correct Answer: higher net present value
In mutually exclusive projects, project which is selected for comparison with others must have higher net present value. A positive net present value indicates that the projected earnings generated by a project or investment - in present dollars - exceeds the anticipated costs, also in present dollars. It is assumed that an investment with a positive NPV will be profitable, and an investment with a negative NPV will result in a net loss.