| PI = 1 + \frac{NPV}{I_0} |
where
NPV | Net Present Value |
I_0 | Initial Investment |
NPV dictates that commercial project should not only be just profitable but instead should be on par with or more profitable than easily available investment alternatives
The corporate investment policy usually dictates that:
investment projects with negative NPV should be rejected
investment projects with higher NPV should have a financing priority over the projects with lower NPV