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Business
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Number of pages / Number of words: |
18 / 4861 |
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Note that the PI method is closely related to the NPV approach. In fact, if the net present value of a project is positive, the PI will be greater than 1. On the other hand, if the net present value is negative, the project will have a PI of less than 1. The same conclusion is reached, therefore, whether the net present value or the PI is used...
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In other words, if the present value of cash flows exceeds the initial investment, there is a positive net present value and a PI greater than 1, indicating that the project is acceptable.
PI is also known as a benefit/cash ratio.
Accept project if PI > 1.
Reject if PI < 1.0
HARDING PLASTIC MOLDING COMPANY
[pic]
Executive Summary
Harding Plastic Molding Company has money to invest in capital budgeting projects...
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