To increase its production capacity, a firm is considering 1) to expand its plant, to acquire another company, or to contract with another company for production.These three projects are examples of independent projects.

Question

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Independent projects are those whose cash flows are not affected by the acceptance or rejection of other projects. In this case, the projects are mutually exclusive because choosing one option (expanding the plant, acquiring another company, or contracting out production) affects the feasibility or necessity of the others.

To Increase Its Production Capacity, a Firm Is Considering 1)