Present Value Index


Also found in: Acronyms, Encyclopedia.

Present Value Index (PVI)

The ratio of the NPV of a project to the initial outlay required for it. The index is an efficiency measure for investment decisions under capital rationing.

Present Value Index

The ratio of the net present value of an investment to its total expense. A ratio of more than 1 indicates a profitable investment, while a ratio of less than 1 indicates one that will likely result in a loss. A present value index is used most often when one is making an investment decision and only has a finite amount of risk capital.
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