Profitability Index

From knowledgebase
Jump to navigation Jump to search

The 'Profitabilty Index looks at the ratio of the NPV compared to the initial investment required:

= Failed to parse (syntax error): {\displaystyle \frac{NPV}} Template:Initial\ Investment

Compare the following projects:

Project NPV at 10%
A
30 5
21
B
5 20
16
C
5 15
12

The profitability index would be:

Project Investment NPV Profitability Index
A 10 21 2.1
B 5 16 3.2
C 5 12 2.4