Profitability index: Difference between revisions
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imported>Doug Williamson (Change "is" to "may be".) |
imported>Doug Williamson m (Spacing 21/8/13) |
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(PI). The profitability index may be represented by the following formula: | (PI). | ||
The profitability index may be represented by the following formula: | |||
Profitability index = PV/Co | Profitability index = PV/Co | ||
Where: | Where: | ||
PV = the present value of all the cashflows except the initial investment. | PV = the present value of all the cashflows except the initial investment. | ||
Co = the absolute value of the initial investment. | Co = the absolute value of the initial investment. | ||
Projects with a PI > 1 are acceptable. | Projects with a PI > 1 are acceptable. | ||
== See also == | == See also == | ||
* [[Capital rationing]] | * [[Capital rationing]] | ||
* [[Present value]] | * [[Present value]] | ||
Revision as of 11:55, 21 August 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.
