The correct answer is: B. Independent projects.
Independent projects are projects whose cash flows are not affected by the acceptance or rejection of other projects. In other words, the decision to accept or reject one independent project does not affect the decision to accept or reject another independent project.
For example, a company may be considering two independent projects, Project A and Project B. Project A is a new product line that the company believes will have a positive impact on its bottom line. Project B is a new marketing campaign that the company believes will increase sales of its existing products. The company can decide to accept or reject either project without affecting its decision on the other project.
Dependent projects are projects whose cash flows are affected by the acceptance or rejection of other projects. In other words, the decision to accept or reject one dependent project may affect the decision to accept or reject another dependent project.
For example, a company may be considering two dependent projects, Project A and Project B. Project A is a new factory that the company believes will increase its production capacity. Project B is a new distribution center that the company believes will be needed to support the increased production from Project A. The company cannot decide to accept Project A without also deciding to accept Project B, because Project B is necessary for Project A to be successful.
Net value projects are projects that have a positive net present value (NPV). In other words, the present value of the project’s cash inflows is greater than the present value of its cash outflows.
All independent projects are net value projects, but not all net value projects are independent projects. For example, a project that has a positive NPV may be dependent on another project. In this case, the company would need to consider both projects together when making its decision.