User:Srisundar.b

Excess present value index
Profitability Index Method. Definition: ... The profitability index is also called as Benefit-cost ratio or excess present value index. It may be defined as the ratio which is obtained by dividing the PV of the future cash inflows by the present value of cash outflows.

Profitability Index = (PV of future cash flows) ÷ Initial investment: This of course being where PV = the present value of the future cash flows in question. Or = (NPV + Initial investment) ÷ Initial Investment: As one would expect, the NPV stands for the Net Present Value of the initial investment.