The Profitability Index formula is given as (PV of future cash flows)/Initial investment. Here is a useful profitability index method calculator which helps you to calculate PI using PV/present value of future cash flows.Find the profit investment or value investment for a project to quantify the amount of value created per unit of the investment using this Profitability Index (PI) calculator. You can calculate PI by either using PV of future cash flow or net Present Value.
Calculate Profitability Index for present value of future cash flows as 5 dollar million and initial investment of 2 dollar million.
Profitability Index (PI) = PV of Future Cash Flows / Initial Investment Requirement
= 5 / 2
= 2.5 million