Show that the profitability index (PI), the initial outlay (C0), and the net present value (NPV) of a project are related by the following equation NPV C0(1 PI) ...

Let S be the sum of the present values of ...

Show that the profitability index (PI), the initial outlay (C0), and the net present value (NPV) of

Question:

Show that the profitability index (PI), the initial outlay (C0), and the (NPV) of a project are related by the following equation.
NPV = C0(1 - PI)

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...