X-cita is a multinational organization that is listed in New York Stock Exchange. The ProductDevelopment Team of X-cita has proposed two new lines of switching devices. However, due tosimilarity in the devices features and capital constraints, the X-cita management conductedextensive financial analysis to select the most profitable device. Both devices require capitalinvestment of $200 million and have 10-year lifetime. Using estimates for each year of the product life, David - the CFO of X-cita, - concluded thatswitching device (A) will payback during 3-years' time and would result in a positive net presentvalue (NPV) of $60 million. On other side, switching device (B) is expected to result in a positivenet present value (NPV) of $100 million but will payback within 6 years'-time.During the Board of Directors meeting, David commented that device (B) looked very promisingdue to high net present value. Yet, a board member expressed concern about the long paybackperiod of device (B) and suggested to select project (A). Determine whether the two devices are mutually exclusive or independent investments.
