--%>

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 : Example of public goods Drinking at a

    Drinking at a public water fountain is: (w) a public good because anyone may drink from it. (x) results in a negative externality because others can’t drink from this at similar time. (y) a positive externality because you are benefiting by other’s provisi

  • Q : Risky forms of production to gain

    Entrepreneurs: (w) undertake risky forms of production to gain uncertain profits. (x) obtain interest payments for their services. (y) are usually overcompensated for their innovations. (z) receive virtually all their wealth by inheritance.

  • Q : Possession protection of property rights

    Why possession protection of property rights and private property promotes the market system?

  • Q : Illustration of Absolute and Relative

    The price of KnickKnacks is $1 and the price of WigWags has increased with $2 to $3. Therefore:  (w) absolute price of KnickKnacks has decreased and the relative price of WigWags has increased. (x) relative and absolute prices of KnickKnacks have

  • Q : Resources of private Capitalism I have

    I have a problem in economics on Resources of private Capitalism. Please help me in the following question. The Private individuals own most resources and find out how they will be employed in an economic system of: (1) Socialism. (2) Capitalism. (3)

  • Q : Restriction of laissez-faire government

    A laissez-faire government is restricted to finding: (1) property rights within a simple fashion and to enforcing private contracts. (2) market prices which guarantee equitable resource allocations. (c) how resources will be allocated efficiently. (4)

  • Q : Elucidate state expenditures and

    Elucidate state expenditures and receipts for all states in 1998?

  • Q : Marketing in action Which of the

    Which of the following are examples of public goods?

  • Q : Describe Low financial leverage and low

    Describe briefly Low financial leverage, low operating leverage?

  • Q : Define the natural price by Adam Smith

    In words of Adam Smith, who theorized that the “natural price” of a good based most directly upon the: (1) wage rate and the relative amount of labor required to produce the good. (2) greater of the value of the good &ldqu