Respuesta :
It is called the Profitability Index.
What is the Profitability Index?
The profitability index (PI), also known as the value investment ratio (VIR) or profit investment ratio (PIR), is an index that shows how the benefits and costs of a proposed project are related. It is estimated as the difference between the project's initial investment and the present value of predicted future cash flows. A project will be deemed more attractive if its PI is higher.
Components of the PI
Time value of money calculations must be used to determine the present value of future cash flows. To compare future cash flows to current monetary levels, the right number of periods is used to discount cash flows. Discounting takes into consideration the premise that money obtained now has a higher earning potential than money that won't be available for another year thanks to interest-bearing savings accounts. As a result, cash flows received further in the future are thought to have a lower present value than cash received more recently.
Therefore, the present value of an investment's future cash flows divided by the initial cost of the investment is called the Profitability Index.
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