· The ratio between amount of profit and investment is known as
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Answer:
The ratio between amount of profit and investment is known as profitability index (PI) or profit investment ratio (PIR),
Explanation:
- Profit investment ratio represents the relationship between the costs and benefits of a proposed project.
- It is calculated as the ratio between the present value of future expected cash flows and the initial amount invested in the project.
- A higher PI means that a project will be considered more attractive.
- A PI of 1 indicates that the project will break even.
- A PI is less than 1 means the costs outweigh the benefits.
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The profitability index (PI) or profit investment ratio measures the relationship between profit and investment (PIR),
Explanation:
The profit investment ratio depicts the relationship between a proposed project's expenses and rewards.
It's computed as the ratio of the present value of future predicted cash flows to the project's initial investment.
A project with a higher PI will be viewed as more appealing.
A project with a PI of 1 is expected to break even.
If the PI is less than one, the costs are greater than the benefits.
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