Discussion 5.5 | Business & Finance homework help
The profitability index (PI) is a financial ratio that measures the present value of future cash flows from an investment divided by its initial cost. This can be used to compare different investments and rank them in terms of their expected rate of return. To make an informed decision, you need to calculate the PI for each project and then compare them side-by-side. The project with the highest PI should be chosen as it will generate the most profit over time.