ECONOMICS

Detailed explanation-1: -What Is An Independent Project? An independent project refers to projects whose cash flows are not dependent on other projects. Therefore, its approval or disapproval is unrelated to the approval or disapproval of other projects. In other words, choosing one project does not affect other projects in the group.

Detailed explanation-2: -Independent projects are those not affected by the cash flows of other projects. Mutually exclusive projects, however, are different. If two projects are mutually exclusive, it means there are two options for accomplishing the same result.

Detailed explanation-3: -Which project or projects should be accepted if they are independent? An independent project is a project whose cash flows are not affected by the accept/rejectdecision for other projects [Bus]. If the independent Project meets the capital budgeting criteriaand NPV exceeds zero, then they should be accepted.

Detailed explanation-4: -An example of an independent project may be the decision to export to another country. If this opportunity has a positive NPV, it should be accepted. Mutually exclusive projects, on the other hand, exclude each other from being selected. In other words, if one is selected, the others are automatically rejected.