Profitability Index Solution

STEP 0: Pre-Calculation Summary
Formula Used
Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment
PI = (NPV+Initial Invt)/Initial Invt
This formula uses 3 Variables
Variables Used
Profitability Index (PI) - Profitability Index (PI) is the ratio of payoff to the investment of a proposed project.
Net Present Value (NPV) - Net Present Value (NPV) is a method of determining the current value of all future cash flows generated by a project after accounting for the initial capital investment.
Initial Investment - The Initial Investment is the amount required to start a business or a project.
STEP 1: Convert Input(s) to Base Unit
Net Present Value (NPV): 700 --> No Conversion Required
Initial Investment: 2000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
PI = (NPV+Initial Invt)/Initial Invt --> (700+2000)/2000
Evaluating ... ...
PI = 1.35
STEP 3: Convert Result to Output's Unit
1.35 --> No Conversion Required
FINAL ANSWER
1.35 <-- Profitability Index (PI)
(Calculation completed in 00.004 seconds)
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Portfolio Variance
Go Portfolio Variance = (Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient)
Jensen's Alpha
Go Jensen's Alpha = Annual Return on Investment-(Risk Free Interest Rate+Beta of the Portfolio*(Annual return of the market benchmark-Risk Free Interest Rate))
Compound Interest
Go Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)
Certificate of Deposit
Go Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
Actuarial Method Unearned Interest Loan
Go Actuarial Method Unearned Interest Loan = (Number of Remaining Monthly Payments*Monthly Payment*Annual Percentage Rate)/(100+Annual Percentage Rate)
Equivalent Annual Annuity
Go Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)
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Go Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)
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Profitability Index
Go Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment
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Risk Premium
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Profitability Index Formula

Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment
PI = (NPV+Initial Invt)/Initial Invt

How to Calculate Profitability Index?

Profitability Index calculator uses Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment to calculate the Profitability Index (PI), Profitability Index (PI) is the ratio of payoff to the investment of a proposed project. Profitability Index (PI) is denoted by PI symbol.

How to calculate Profitability Index using this online calculator? To use this online calculator for Profitability Index, enter Net Present Value (NPV) (NPV) & Initial Investment (Initial Invt) and hit the calculate button. Here is how the Profitability Index calculation can be explained with given input values -> 1.35 = (700+2000)/2000.

FAQ

What is Profitability Index?
Profitability Index (PI) is the ratio of payoff to the investment of a proposed project and is represented as PI = (NPV+Initial Invt)/Initial Invt or Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment. Net Present Value (NPV) is a method of determining the current value of all future cash flows generated by a project after accounting for the initial capital investment & The Initial Investment is the amount required to start a business or a project.
How to calculate Profitability Index?
Profitability Index (PI) is the ratio of payoff to the investment of a proposed project is calculated using Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment. To calculate Profitability Index, you need Net Present Value (NPV) (NPV) & Initial Investment (Initial Invt). With our tool, you need to enter the respective value for Net Present Value (NPV) & Initial Investment and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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