Profitability Index (abbreviated as PI) index, also known as profit or profit index, is the investment project the future net cash flows and present value of the total present value of the ratio of the original investment. The formula is: Present value index (PI) = NCF total present value of future / present value of the original investment If the project is put into a one-time initial investment in the beginning, and no construction period. n NCFt Present value index (PI) = Σ ---- / C t = 1 (1 + K) t Decision rule: If the present value of investment projects index greater than or equal to 1, indicating that the investment return on investment is higher than or equal to a predetermined discount rate, the project is acceptable; if the investment program of less than 1, indicating that the investment project return on investment is lower than a predetermined discount rate, the project is not acceptable. Mutually exclusive alternative projects in a number of options, should accept the present value of the index of the largest investment project is greater than 1.
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