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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Full browser ?