Page 18 - FINAL CFA I SLIDES JUNE 2019 DAY 10

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