PROFITABILITY INDEX-ALL YOU NEED TO KNOW
The profitability index measures the monetary benefits (i.e. cash inflows) received for each dollar invested (i.e. cash outflow), with the cash flows discounted back to the present date.
More specifically, the profitability index ratio compares the present value (PV) of future cash flows received from a project to the initial cash outflow (investment) to fund the project….
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