EME 460
Geo-Resources Evaluation and Investment Analysis




Mutually exclusive projects: making an analysis of several alternatives from which only one can be selected, such as selecting the best way to provide service or to improve an existing operation or the best way to develop a new process, product, mining operation, or oil/gas reserve.

Non-mutually exclusive projects: analyzing several alternatives from which more than one can be selected depending on capital or budget restrictions, such as ranking research, development, and exploration projects to determine the best projects to fund with available dollars.

This lesson focuses on the analysis of mutually exclusive alternatives. Valid discounted cash flow criteria such as rate of return, net present value, and benefit-cost ratio are applied in very different ways in proper analysis of mutually exclusive and non-mutually exclusive alternative investments.

Learning Objectives

At the successful completion of this lesson, students should be able to:

  • understand how to use rate of return and NPV analysis to evaluate mutually exclusive projects and non-mutually exclusive projects;
  • understand how to conduct Incremental Analysis; and
  • understand how variable minimum rate of return with time can affect the project.

What is due for Lesson 4?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Lesson 4: Reading and Assignment
Reading Read Chapter 4 of the textbook.
Assignment Homework 4.


If you have any questions, please post them to our discussion forum, located under the Modules tab in Canvas. I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.