Profitability Index Calculation Examples Help

Profitability Index Calculation Examples, Illustrations, Concept, Sample help Online

 

Looking for Profitability Index Calculation Examples, Concept and Calculation help to do your assignment, homework or project then you are at the right place.
 

Concept of Profitability Index Calculation Examples

 
Profitability index is also known as profit investment ratio. It is a type of financial tool which us whether an investment should be accepted or rejected. It helps in identifying the relationship between the costs and benefits of a proposed project. Profitability index can be calculated using the following formula
 
Profitability Index
 
= Present Value of Future Cash Flows/Initial Investment Required
= 1 + Net Present Value/Initial Investment Required
 

Services We Offer

Why Select Us

Finance Assignment Help Online Features

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.
Best Customer Service
Our customer representatives are working 24X7 to assist you in all your assignment needs. You can drop a mail to assignmentconsultancy.help@gmail.com or chat with our representative using live chat shown in bottom right corner.
Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.
100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

Referral Program

Refer us and Earn up to 5000 USD

Place Order and generate unique Code
Whenever you make a payment. You are eligible for a referral code, just request in email so that you will get the code which you can share with your friends.

Earn Money
You will be eligible for referral bonus if your friend place the order using the same referral code using no other discounts after successful payment made by him.

Encash it or Use it in your next assignments
You can request the encashment as mentioned in step 2 or you can use it as a method of payment for your next assignments.


 

Profitability Index Calculation Examples Explanation

 
Let’s understand the concept of profitability index with help of an example.
 
Example: A company is proposed a project at a cost of $500000which is expected to generate future net cash flows with a present value of $650000 million. Calculate the profitability index.
 
Solution
 
Profitability Index = PV of Future Cash Flows / Initial Investment Required
Profitability Index = $6500000 / $500000 = 1.3
Net Present Value = PV of Net Future Cash Flows − Initial Investment Required
Net Present Value = $650000-$500000 = $150000.
We can calculate Profitability Index using the above information as follows
Profitability Index = 1 + (Net Present Value / Initial Investment Required)
Profitability Index = 1 + $150000/$500000 = 1.3
 
If you are looking for similar Profitability Index Calculation Examples then type assignment, click here . You can visit us for more examples here.
 

Summary