Step-by-Step Instructions for Gathering Data: You will need to gather the following financial data:
The first step in calculating profitability index in Excel is gathering data. Gathering Data for Profitability Index Calculation A profitability index greater than 1.0 is considered to be a profitable investment. Profitability index is a financial metric used to determine the profitability of an investment by dividing the present value of future cash flows by the initial investment cost. How is profitability index used to compare investment opportunities? What is the difference between profitability index and net present value (NPV)? What is an appropriate discount rate for calculating profitability index in Excel?
