CFA论坛 - Powered by Discuz! Board

标题: capital budgeting question - Profitability Index (PI) [打印本页]

作者: simeezee 时间: 2011-7-13 13:25 标题: capital budgeting question - Profitability Index (PI)

Hi,

PI = PV of future cashflows / CFo = 1 + NPV/CFo

Can anyone explain how this relationship holds. Where does the 1 + come from?

thanks

作者: FVPV 时间: 2011-7-13 13:25

NPV = - initial outlay(same as CFo) + PV of future cash inflows.

=> PV of future cash inflows = NPV + initial outlay(same as CFo)

now plug this equation in PI equation and you will get the answer

作者: spartanag07 时间: 2011-7-13 13:25

thanks. that makes sense

欢迎光临 CFA论坛 (http://forum.theanalystspace.com/)