Profitability index – PI
Profitability index is the ratio of the adjusted income to the amount of invested capital. Profitability index is calculated using the following formula:
CFn – net discounted cash flow in the n period,
In – initial investment in the n period (or total investment),
r – discount rate,
NPV net discounted (present) income.
At values PI > 1 it is considered that this investment is effective.
☛ Note that the result of calculations is influenced by the discounting step chosen by the user, and other settings of the calculation parameters of investment indicators.
Budget-Plan Express is a software product for preparing business plans and presentations in Word and Excel format - for small businesses and studies (students, MBI students, etc.)
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