--%>

Define Benefit Cost Ratio or Profitability Index

Briefly describe the term Benefit Cost Ratio (or B/C Ratio) or Profitability Index (or PI)?

E

Expert

Verified

Profitability index (or PI) is also named as profit investment ratio (or PIR) and as well named as value investment ratio (or VIR) that tells that a proposed project will have the ratio of induce to investment. It is like a tool that is employed for ranking projects and it permits quantifying the amount of value formed per unit of investment. If the value of profitability index is less than 1 then admit the project and if it is greater than one then refuse the project. Another way to compute the profitability index is prospect cash flows divided by the initial investment.

   Related Questions in Business Economics

  • Q : Economic efficiency enhancement as

    Transaction costs are decreased and economic efficiency is enhanced by: (1) long-term wage and price controls. (2) monopolies which cooperate with central planners. (3) blacklists and yellow dog contracts. (4) bureaucratic tendencies

  • Q : Business Economics Hello, I would like

    Hello, I would like help with my assignment.

  • Q : Type of expenditure at the local level

    What is the most important source of revenue and the major type of expenditure at the local level?

  • Q : Explain the behavior of the workers Use

    Use the economic perspective to explain the behavior of the workers?  Why do they work so diligently?

  • Q : Freely Floating Currency Question: For

    Question: For a freely floating currency, currency i.____________________ occurs when the market value of a country's currency rises relative to the value of another country's currency, while currency ii.__________

  • Q : Changing rates of Appreciation and

    Elucidate the changing rates of Appreciation and Depreciation?

  • Q : Budget line and indifference curves

    Question: Monica has been considering buying a mountain bike. Last month Monica had an income of $30,000. The bike's price was $1000, the composite good price was $1, and she decided not to buy the bike.  This month Monica was surprised t

  • Q : Problem on current production

    I have a problem in economics on current production possibilities frontier. Please help me in the following question. The combination of 70 units of clothing and 30 units of food are: (1) Completely employs the economy's capacity. (2) Would leave most

  • Q : Our junior high school serves a

    Comment on the following statement from a newspaper article:  “Our junior high school serves a splendid hot meal for $1 without costing the taxpayers anything, thanks in part to a government subsidy.”

  • Q : What are the limitations of Circular

    What are the limitations of Circular Flow Model?