## What is the profitability index of the project

Profitability index (PI) is also known as profit investment ratio (PIR) and also termed as value investment ratio(VIR) which tells that a proposed project will have Profitability Index is a tool which shows whether a business project is worthwhile by calculating the relationship between cost and benefits. Find out more. But each project varies in the size and number of cash ﬂows generated. Project If the Proﬁtability Index is greater than one, the capital investment is accepted. 20 Aug 2015 Most companies use the profitability index as a hurdle to decide which projects move forward and which don't. The figure shows that bigger Under this method, the cash inflows after payback period is taken into account for considering the profitability of the project. It can be calculated in the following A profitability index of 1.0 is logically the lowest acceptable measure on the index, as any value lower than that number would indicate that the project's present value (PV) is less than the

## These are all the following rules applied in PI to accept and reject the projects. The project will be accepted if PI value is greater than one (PI > 1) and will be

Definition: Profitability index, also known as profit investment ratio, is an investment tool that the financial professionals use to determine if an investment should be accepted or not based on the time value of money concept. The profitability index, also known as the profit investment ratio, is calculated as the ratio of the present value of the future cash flows and the initial investment in the project. The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs. It is an evaluation of the profitability of an investment and can be compared with the profitability of other similar investments which are under consideration. the profitability index is also referred to as benefit-cost ratio, Profitability Index Method. Profitability index serves as a tool to classify projects. If the value of the index is bigger, then the project would be more attractive. The acceptable measure of profitability index for a single project is 1.0 or more. This suggests that the business will move forward. The Profitability Index (PI) or profit investment ratio (PIR) is a widely used measure for evaluating viability and profitability of an investment project. It is calculated by dividing the present value of future cash flows by the initial amount invested.

### Profitability Index Method. Profitability index serves as a tool to classify projects. If the value of the index is bigger, then the project would be more attractive. The acceptable measure of profitability index for a single project is 1.0 or more. This suggests that the business will move forward.

The NPV represents the amount of present-value cash flows that a project can The profitability index is determined by dividing the present value of each 5 Mar 2019 of the profitability index of real estate initiatives appears critical: in fact, real estate projects in areas or buildings through modifications to the Project A. Total present value = Annual cash flow x 10% annuity factor = 8000 x 3.170 = $ 25,360. Profitability Index (PI) = TPV Profitability index (PI) is also known as profit investment ratio (PIR) and also termed as value investment ratio(VIR) which tells that a proposed project will have Profitability Index is a tool which shows whether a business project is worthwhile by calculating the relationship between cost and benefits. Find out more.

### A profitability index (PI) of .92 for a project means that ______. Open Hint for Question 1 in a new window.

Profitability index ( PI ), also known as profit investment ratio ( PIR) and value investment ratio ( VIR ), is the ratio of payoff to investment of a proposed project. It is a useful tool for ranking projects because it allows you to quantify the amount of value created per unit of investment. A profitability index of 1 indicates breaking even, which is an indifferent result for potential investors. If the result is less than 1.0, logic suggests that the investment should be avoided, as the project's costs outweigh the potential profits. Definition: Profitability index, also known as profit investment ratio, is an investment tool that the financial professionals use to determine if an investment should be accepted or not based on the time value of money concept. The profitability index, also known as the profit investment ratio, is calculated as the ratio of the present value of the future cash flows and the initial investment in the project. The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs. It is an evaluation of the profitability of an investment and can be compared with the profitability of other similar investments which are under consideration. the profitability index is also referred to as benefit-cost ratio, Profitability Index Method. Profitability index serves as a tool to classify projects. If the value of the index is bigger, then the project would be more attractive. The acceptable measure of profitability index for a single project is 1.0 or more. This suggests that the business will move forward.

## The profitability index, also known as the profit investment ratio, is calculated as the ratio of the present value of the future cash flows and the initial investment in the project.

Definition: Profitability index, also known as profit investment ratio, is an investment tool that the financial professionals use to determine if an investment should be accepted or not based on the time value of money concept.

Profitability Index Rule: The profitability index rule is a regulation for evaluating whether to proceed with a project or investment. The profitability index rule states: If the profitability