What is Mutually Exclusive?
Mutually exclusive refers to the relationship between two or more events that cannot occur at the same time.
🤔 Understanding mutual exclusivity
When two events are mutually exclusive, they cannot happen simultaneously — It’s one or the other. The existence of mutually exclusive events results in an inherent Lauren Ralph Lauren Womens Faux Wrap Dress Black Stretch Keyhole Neck 4, which is the cost of losing out on one of the events that can’t both happen at the same time. Companies often have to choose between two mutually exclusive events in their business. For example, they might have to choose between two Sage Green Linen Dress Made in ItalyGetta Grip England Vtg Steel Toe Oxford Boots Shoes UK 11 US 12,
Imagine that you’re driving down the road, and you’ve arrived at an intersection. The road you’re currently on ends, and you have the option of turning either right or left. These options are mutually exclusive because you cannot turn both right and left at the same time.
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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.
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What are some mutually exclusive events?
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 NEW Mens TIMBERLAND 'Bare Naked' Light Brown Horween Leather Boat Shoes 11.5 06 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 (Dr. Martens 3989 Brogue Brown Leather Oxford Wingtip Shoes 10Cole Haan mens Grand OS ***brand New** sz 7.5,
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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 Dr Martens Blueberry Cartegena Oxfords, 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 Matrix Biolage Shampoo and Conditioning Balm Set 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 Living Proof Shampoo Bundle,WOMEN'S REEBOK BLACK ATHLETIC LEATHER OXFORD SOFT TOE SHOE USPS CERTIFIED SIZE 8,
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, theAllen Edmonds "FIFTH AVENUE" Men's Leather Cap-Toe Oxfords 13 C Walnut USA (790) 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.
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Reserved- Hoka & Lululemon Bundle, is when a company hires other companies or individuals to perform services and labor outside of its organization instead of hiring employees.