Respuesta :
Profitability Index computes the number of dollars returned for every dollar invested, with all calculations performed in present value dollars.
Profitability index: what is it?
An evaluation of a project's or investment's attractiveness is done using the profitability index (PI). By dividing the project's original investment amount by the present value of anticipated future cash flows, the PI is derived.
How is the profitability index calculated?
Profitability Index is the product of the initial investment and the present value of future cash flows. The following is an alternative illustration of the profitability index formula: Profitability Index is equal to the initial investment divided by (Net Present Value + Initial Investment).
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