Profitability Index Calculator


Instructions: Use this Profitability Index Calculator to compute the profitability index (\(PI\)) of a stream of cash flows by indicating the yearly cash flows (\(F_t\)), starting at year \(t = 0\), and the discount rate (\(r\)) (Type in the cash flows for each year from \(t=0\) to \(t = n\). The first cash flow must be negative. Type '0' if there is no cash flow for a year):

Interest Rate \((r)\) =
Type the yearly cash flows (comma or space separated)


Profitability Index Calculator

More about the this PI calculator so you can better understand how to use this solver: The profitability index of a stream of cash flows \(F_t\) depends on the discount interest rate \(r\), and the cash flows themselves. It is computed as the present value (\(PV\)) after the initial investment \(I\). Let:

\[ PV = \displaystyle \sum_{i=1}^n \frac{F_i}{(1+i)^i} \]

be the present value (\(PV\)) after the initial investment. The profitability index is therefore:

\[ PI = \frac{PV}{I}\]

Other ways to evaluate a project include using instead a NPV calculator or also a IRR calculator. Those two metrics are the most common ones used to evaluate and make the decision of whether or not a project should be undertaken.




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