Question

When the mutually exclusive alternatives under consideration have only disbursements (service alternatives), the do-nothing alternative must be included so that a rate of return analysis can be conducted on the incremental cash flow. True/False

Answer 1

Answer: False

Explanation:

When more than one alternative can be selected from those available, the alternatives are said to be mutually exclusive. In evaluating independent alternatives, each alternative is compared against the "Do Nothing" alternative.

For mutually exclusive alternatives, the do-nothing is a viable option when revenue alternatives are involved.