Profitability Index Calculator

Calculate profitability index for investment analysis.

Profitability Index Calculator - Investment Analysis Tool

Profitability Index Calculator

Calculate profitability index for investment analysis and project evaluation.

Investment Parameters

Future Cash Flows

Quick Examples

Profitability Index Results

Profitability Index
Net Present Value
PV of Cash Flows

Interpretation

Year Cash Flow Discount Factor Present Value
0 1.000

Formula & Education

Profitability Index Formula:

PI = PV of Future Cash Flows ÷ Initial Investment

Present Value Formula:

PV = CF₁/(1+r)¹ + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ

Decision Rules:

  • • PI > 1.0: Accept the project
  • • PI = 1.0: Indifferent (breakeven)
  • • PI < 1.0: Reject the project
  • • Higher PI indicates better investment

Advantages:

  • • Easy to understand and calculate
  • • Considers time value of money
  • • Useful for ranking projects
  • • Relative measure of profitability
v1.0.0.758733

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v1.0.0.758733