...
This particularly means that some projects with higher higher NPV may be less attractive in PI terms as it required than lesser NPV projects as they require a high initial investment.
This allows a fair comparison of investment efficiency between two investment projects with different initial investments volumes.
The corporate investment policy usually dictates that:
...
...
...
- priority over the projects with lower PI
- investment Projects with lower PI are added up to the Investment Package to reach the pre-set value of affordable Initial Investment (I0)
- investment Projects with lower risk should have a priority over the projects with higher risk
The quantification of Project's is performed individually for each Project based on its nature.
Weighing the Project's risks against PI to include to or exclude from Investment Package is based on the Corporate Investment Policy.
See also
...