Page 20 - FINAL CFA SLIDES DECEMBER 2018 DAY 11
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Session Unit 10:
35. Capital Budgeting
Profitability Index (PI), p.27
The profitability index (PI) is the present value of a project’s future cash flows divided
by the initial cash outlay:
If the NPV +, PI > 1.0, accept the project.
Otherwise, PI < 1.0, reject the project.
tanties
