Project profitability index
What is profitability index it is a tool for measuring profitability of a proposed corporate project (also called cost-benefit ratio or benefit-cost ratio. Why determine project profitability i think there are several reasons for knowing your project profitability timely profitability calculations let you take. An index that attempts to identify the relationship between the costs and benefits of a proposed project through the use of a ratio calculated as. 1 answer to a project profitability index greater than zero for a project indicates that a the discount rate is less than the internal rate of return b the - 194620. The profitability index is an indication of the costs and benefits of investing in a particular capital project by a business firm.
Use the profitability index method formula and a discount rate of 12% to determine if this is a good project to undertake. Project profitability index = net present value of the project ÷ investment required 0315 = net from acct 311 at liberty university duplicate. 90 if a project's profitability index is less than 1, the project's a discount rate is above its from accy 309 at ole miss.
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. A profitability index attempts to identify the relationship between the costs and benefits of a proposed project the profitability index is calculated by dividing.
Profitability index is an investment appraisal technique calculated by dividing the present value of future cash flows of a project by the initial investment required. Start studying profitability index learn vocabulary, terms, and more with flashcards, games, and other study tools.
- Profitability index (pi) is a capital budgeting technique to evaluate the investment projects for their viability or profitability discounted cash flow technique is.
- Compute the project profitability index for each investment proposal (round your answers to 2 decimal places.
- Ratio of the present value of a project's cash flows to the initial investment a profitability index number greater than 1 indicates an acceptable project, and is.
- The profitability index measures the acceptability of a proposed capital investment it does so by comparing the initial investment to the present value of the future.
It is an evaluation of the profitability of an investment and can be compared with the profitability interpretation of profitability index an investment project. You, the project manager, have to work with business managers who think in terms of bottom line, profit and revenues project profitability analysis is a technique.