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Which one of the following best expresses two mutually exclusive investments? a. Constructing a...

Question:

Which one of the following best expresses two mutually exclusive investments?

a. Constructing a theatre and a restaurant side by side.

b. Locating a restaurant inside a theatre building.

c. Building either a gas station or a restaurant on a corner lot.

d. Building both a restaurant and a parking lot on a vacant lot.

e. Building a parking lot for the benefit of both restaurant and theatre patrons.

What Are Mutually Exclusive Investments:

It is important to understand the concept of Mutually Exclusive Investments when making capital allocation decisions. Mutually Exclusive Investments are opportunities that, by picking one of the alternatives, the other alternative is no longer possible.

Answer and Explanation:

The correct answer is c. Building either a gas station or a restaurant on a corner lot.

  • In all other instances, the investments will rely on each other in order to generate income (e.g. the restaurant inside the theater is dependent on the clientele volume of the theater itself to be viable), therefore they will co-exist.

Learn more about this topic:

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Mutually Exclusive Events & Non-Mutually Exclusive Events

from 6th-8th Grade Math: Practice & Review

Chapter 48 / Lesson 5
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