Inputs
All amounts in your chosen currency
Results
—
- Sum of PV of future inflows 0.00
- Initial outlay 0.00
- Net present value (NPV) 0.00
- Profitability Index (PI) 0.0000
- Decision rule —
Formula used
The Profitability Index (PI) measures the ratio of the present value of future cash inflows to the initial investment:
PI = Σt=1..T [ CFt / (1 + r)t ] ÷ I0
where CFt is the cash flow at period t, r is the discount rate, and I0 is the absolute value of the initial outlay at time 0. If a tax rate is provided, after‑tax cash flows are used. Salvage value (if any) is added to the final period cash flow.
Decision rule: Accept projects with PI > 1. Ties may be broken by higher NPV if capital is not rationed.
Example data
| Project | Outlay | Rate % | CFs (t=1..5) | PI | |
|---|---|---|---|---|---|
| Alpha | 150000 | 9 | 40000 | 45000 | 50000 | 55000 | 60000 | — | |
| Bravo | 200000 | 11 | 50000 | 60000 | 65000 | 70000 | 75000 | — |
Click Load to send a row to the calculator. PI cells update after you calculate.