Difference between revisions of "Profitability index"

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(PI). The profitability index is represented by the following formula:
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(PI). The profitability index may be represented by the following formula:
  
 
Profitability index = PV/Co
 
Profitability index = PV/Co
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* [[Capital rationing]]
 
* [[Capital rationing]]
 
* [[Present value]]
 
* [[Present value]]
 
 

Revision as of 06:57, 15 June 2013

(PI). The profitability index may be represented by the following formula:

Profitability index = PV/Co

Where: PV = the present value of all the cashflows except the initial investment. Co = the absolute value of the initial investment.

Projects with a PI > 1 are acceptable.

See also