Profitability Index Calculator

PI = present value ÷ investment.

Profitability index 1.25

Step-by-step with your numbers:

1. Values used:

2. PV of future cash flows = 25,000 $

3. Initial investment = 20,000 $

4. Profitability index = PV of future cash flows / Initial investment = 25,000 / 20,000 = 1.25

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PI > 1 means project creates value.

FAQ

Vs NPV?

PI normalizes by investment size, making projects comparable.