WebbThe profitability index of an investment project is the ratio of the: Multiple Choice average net income from the project to the average investment cost. net present value of the … Webb5 dec. 2024 · The Profitability Index (PI) measures the ratio between the present value of future cash flows and the initial investment. The index is a useful tool for ranking …
Level 1 CFA® Exam: Profitability Index in 60 Seconds - SOLEADEA
WebbThe 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, cost-benefit ratio, or even capital rationing. Webb1 apr. 2024 · Level 1 CFA Exam Takeaways For Profitability Index. Profitability index (PI) is the ratio of the present value of future cash inflows to the initial investment. If a project has a PI greater than 1, you should invest in the project. If the PI is lower than 1, then the project is not profitable. The profitability index is the value we get for ... how to reset display windows
Profitability - Meaning, Formula, How to Calculate? - WallStreetMojo
Webb28 okt. 2024 · When the profitability index is over 1.0, it is positive and the investment will generate profits. If the PI is less than 1.0, then it is negative where the investment will probably fail. In other words, the profitability index is the ratio between the net present value of future cash flows and the initial investment. Webb15 dec. 2024 · Profitability index (PI) is the ratio of present value of a project’s expected future cash flow and initial investment needed to undertake the project. It helps … WebbA) The profitability index measures the value created in terms of NPV per unit of resource consumed. B) The profitability index is the ratio of value created to resources consumed. C) The profitability index can can be easily adapted for determining the correct investment decisions when multiple resource constraints exist. how to reset dishwasher kude70fxbl5