P.I is the proportion between
a) PV of cash inflow and PV of cash outflow
b) PV of cash inflow and total cash outflow
c) Cash inflow and total cash outflow
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The Profitability Index (PI) measures the ratio between the present value of future cash flows and the initial investment. The index is a useful tool for ranking investment projects and showing the value created per unit of investment.
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b) PV of cash inflow and total cash outflow
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