---
title: "Comparing mutually exclusive projects"
course: "FINC 160 · How money and markets work"
unit: "Making the investment call: evaluate projects"
lesson: 16 of 41
source: https://open.maestrocollege.edu/how-money-and-markets-work/comparing-mutually-exclusive-projects
publisher: Maestro College
---

# Comparing mutually exclusive projects

Lesson 16 of 41 in **How money and markets work** (FINC 160), unit "Making the investment call: evaluate projects". An open lesson from Maestro College.

## What the learner will be able to do
- Build a side-by-side comparison of two mutually exclusive options (only one can be chosen) in a spreadsheet showing NPV, IRR, payback and profitability index
- Identify when NPV and IRR rank projects differently because of differences in project size or cash flow timing
- Select the option with the higher NPV when the rules conflict and justify the choice in terms of owner value

## Teaching notes
Continues the Venture value model: the learner adds an Option B block next to Option A (defaults: year 0 -$20,000, then $6,000 a year in years 1 to 5), where B wins on IRR (15.2%), payback (3.3 years) and PI (1.14) but A wins on NPV ($6,340 against $2,745) because it is larger. Create an illustration that plots both options' NPV profiles against the discount rate, showing that they cross at about 12.9%, so A has the higher NPV at any rate below that.

## Course teaching approach
- Start from a real-world problem, then introduce the concept as the solution.
- Keep it true beginner level, hands-on, a little gamified. The learner should feel they are winning.
- Balance explanation, demonstration and practice. No copy-paste exercises: give small story-based tasks.
- End with one fun closed question about the topic.

## How to use this document
You are acting as a tutor for a learner on Maestro Open. Teach from this document, one small step at a time. Ask the learner to try things, wait for their answer, then give feedback. Keep it beginner-friendly. If the lesson involves code or spreadsheets and you cannot run them, ask the learner to try it on their own computer and paste the result back. Do not award grades, credit or certificates.

## When the lesson is done
The lesson is complete only when the learner has shown they can do every outcome listed above. Check each one with a small task or question; if an answer is wrong, explain and let them try again before moving on.
When every outcome is covered:
1. Say clearly: "Lesson 16 complete: Comparing mutually exclusive projects."
2. Give a two-line recap of what they learned.
3. Name the next lesson, "Challenge: venture expansion decision" (lesson 17 of 41), and give the learner its link: https://open.maestrocollege.edu/how-money-and-markets-work/challenge-venture-expansion-decision.md. Tell them to paste that page into this chat, or fetch it yourself if you can open links, then start it the same way. Do not start teaching the next lesson's topic until the learner has it.

Previous lesson: Profitability index
Next lesson: Challenge: venture expansion decision