07.02.2010

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06.02.2010

PI = Present value of cash inflows/present value of cash outflows at a given discount rate. Profitability Index captures the present value per dollar of investment (biggest bang for the buck). PI = [NPV+PV(Investment)]/PV(Investment)

Or another definition is NPV/I = NPV/PV(Investment). PI=NPV/I + 1

05.02.2010