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Profitability Index

Myxomatosis · 2009-01-15 14:38:04

When calculation PI do I take into account Cash Outflows or just focus on Inflows? Eg. Lets say for a range of inflows over a 5 year period I get a present value of net cash flows of 40,000 and I get a PVNCF of 7,000 for the outflows. Initial Investment = 30,000 Is PI then 40,000 % 30, 000 = 1.33 or is it (40,000 - 7,000)…

15-01-2009 2:38pm

#1

Myxomatosis

Closed Accounts Posts: 429 ✭✭

Join Date: April 2006

Posts: 373

When calculation PI do I take into account Cash Outflows or just focus on Inflows?

Eg.

Lets say for a range of inflows over a 5 year period I get a present value of net cash flows of 40,000 and I get a PVNCF of 7,000 for the outflows.

Initial Investment = 30,000

Is PI then

40,000 % 30, 000 = 1.33

or is it

(40,000 - 7,000) % 30,000 = 1.1

?

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