PI = 1 + \frac{NPV}{I_0}

where

	Net Present Value
	Initial Investment

The key difference with NPV is that PI shows a value of returns per unit cash invested.

This particularly means that projects with higher NPV may be less attractive in PI terms as it required a high initial investment.

The corporate investment policy usually dictates that:

investment projects with PI <= 1 should be rejected

investment projects with higher PI should have a financing priority over the projects with lower PI

See also