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When you flip a coin, it’s either going to land with heads or tails facing up — There’s no chance that both sides will be facing up. Other mutually exclusive events work the same way. If two events are mutually exclusive, only one of them can occur.

Two events are mutually exclusive if they cannot both occur at the same time. The occurrence of Event A eliminates any probability of Event B taking place.

Mutually exclusive events also occur regularly in corporate finance. Companies often use Adidas Superstar x LEGO Shoes in White & Black Brand New w/ Box Size 10M 11W to invest in future business growth. When a company is choosing how to invest in their business, they frequently have to choose between two mutually exclusive projects.

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The concept of mutual exclusivity could also come into play for hiring decisions. If a company is conducting interviews for a new chief executive officer (Gianvito Rossi Size 8.5 Black Suede Cork Heels Sandals Made in Italy Womens 38.5NWT Boyish High-rise Skinny Jeans Size 24,

When two events are mutually exclusive, it means they cannot both occur at the same time. But it doesn’t necessarily imply that one of the two events has to happen.

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Think again of a coin toss. The results are mutually exclusive (it will be either heads or tails; it can’t be both on the same flip). And it will be one of the two options — heads and tails are the only possible options (thus they are exhaustive).

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The concept of independent events also applies to capital financing. We know that two Nike Dunk High Light Chocolate Size 10.5, are mutually exclusive if the company can only invest in one of them. But it’s also possible for two capital projects to be independent of one another. Let’s say a Orange Anthropologie Tkees Cross-Strap Sandals (NWT) has a great deal of funding available for capital projects, and they are considering two different options.

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For someone who chooses to go to college, they have the opportunity cost of the income they could be making if they had entered the workforce right away. And if you only look at the immediate outcome, skipping college might seem more Rae Dunn LITTLE MERMAID & PART OF YOUR WORLD mug set.,J.Crew Denim Blue "Vintage Straight" High-Rise Cotton-Blend Jeans Size 25,

But entering the workforce instead of going to college has an opportunity cost as well. While you might make more during the years you would be in college, statistics show the opportunity cost could be substantial over the long run, because you would earn less in later years.

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For the first project, the total revenue would equal $300,000 ($15,000 x 20), with a total profit of $200,000 (ignoring inflation, costs of capital, etc.). The revenue of the second project would come to $360,000 ($18,000 x 20). The revenue is higher, but because the project was more expensive, theDansko Sandra Brown Nubuck Leather Mary Jane Wedge Heel Casual Sandals Sz 38 is lower at $160,000.

For the company to invest in the second project that has a slightly higher revenue but a lower profit margin, the opportunity cost would be the $40,000 less in profit. And the implications are even more significant than that. Not only could they consider the opportunity cost of that $40,000 in profit, but they could also look at the opportunity cost of what they could have done with that $40,000. They might have used that for an additional capital project that would have brought in even more revenue.

Anytime you decide between two mutually exclusive events, there is an opportunity cost. For companies, the opportunity cost of choosing one mutually exclusive opportunity over another could mean millions of dollars.