Profitability Index

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A profitability index (PI), alternatively referred to as a profit investment ratio or a value investment ratio, is a method for discerning the relationship between the costs and benefits of investing in a possible project. Aside from individual cases, many companies and investors use the profitability index as a way of ranking a group of potential projects. It calculates the cost/benefit ratio of the present value of a project’s future cash flow over the price of the project’s initial investment.




The Cube Investment Project in Bolton