...
| LaTeX Math Block | ||
|---|---|---|
| ||
\mbox{PI} = 1 + \frac{\mbox{NPV}}{\mbox{I}_0} |
where
| Net Present Value | ||||
| Initial Investment |
The key difference with NPV is that PI shows a value of returns per unit unit cash invested.
This particularly means that some projects with higher NPV may be less attractive in PI terms than lesser NPV projects as they require a high initial investment.
...