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Index for Investment Profitability

Compare future cash inflows after discounting with first cost.

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Calculations dey happen locally. Results na estimates, no be professional advice.

Profitability index value

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Estimate for learning with your assumptions; no live rates, tax rules or investment recommendations. Returns fit dey negative and no get guarantee.

Formula

Use PI = Σ Cₜ/(1+r)^t / I for periods after the first investment. Cₜ na future inflow, r na discount rate per period as fraction, and I na starting cost. The ratio compare discounted inflows with that cost.

Compare future cash inflows after discounting with first cost.

Example wey show the calculation

Cost wey you pay first
1000
Future cash inflows, from period 1 onward
400, 400, 400
Discount rate for each period (%)
0
Profitability index value
1.2
Net value after discounting to today
200

Where e fit work and limits

Estimate for learning with your assumptions; no live rates, tax rules or investment recommendations. Returns fit dey negative and no get guarantee.

We check inputs for missing values and allowed ranges. Result wey pass the finite numeric range no go show. Rounding affect wetin display, while calculation use the model numeric precision.

Check your units and assumptions before you rely on result. Changing label no convert currency or physical unit.

Version of di formula: a7d576190a52 · Example don get check:

Method

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