{"id":156,"date":"2011-06-13T02:48:24","date_gmt":"2011-06-13T07:48:24","guid":{"rendered":"http:\/\/www.RealEstateAnalysisFREE.com\/blog\/?p=156"},"modified":"2021-04-28T05:24:43","modified_gmt":"2021-04-28T10:24:43","slug":"profitability-index-pi-real-estate-analysis","status":"publish","type":"post","link":"https:\/\/www.zilculator.com\/blog\/profitability-index-pi-real-estate-analysis\/","title":{"rendered":"Profitability Index (PI): Real Estate Analysis"},"content":{"rendered":"<p><strong>Profitability index <\/strong>(<em>profit index<\/em>) is very similar to NPV. It also calculates with the present values of future cash flows and discount rate, therefore it takes in account the time value of money. Profitability index is a ratio which shows if the present value of the cash flows is worth the initial investment. If these values equal (NPV = 0) profitability index will be 1.0. The advantage of using this ratio when comparing different investments is the fact that it tells the proportion of money returned to money invested, rather than the amount as NPV does. This way you can easily compare two investments opportunities which require different initial investments.<\/p>\n<!-- WP QUADS Content Ad Plugin v. 2.0.17 -->\n<div class=\"quads-location quads-ad2\" id=\"quads-ad2\" style=\"float:none;margin:0px;\">\n\n <!-- WP QUADS - Quick AdSense Reloaded v.2.0.17 Content AdSense async --> \n\n\n<script type=\"text\/javascript\" >\nvar quads_screen_width = document.body.clientWidth;\nif ( quads_screen_width >= 1140 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width >= 1024  && quads_screen_width < 1140 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width >= 768  && quads_screen_width < 1024 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width < 768 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }\n<\/script>\n\n <!-- end WP QUADS --> \n\n\n<\/div>\n\n<p><img loading=\"lazy\" class=\"aligncenter\" title=\"Profitability index\" src=\"\/images\/blog\/profitability_index.gif\" alt=\"\" width=\"540\" height=\"65\" \/><\/p>\n<p><strong>Note:<\/strong> Zilculator published a new LEARN section with an updated article including <a href=\"https:\/\/www.zilculator.com\/real-estate-analysis\/find-profitability-index-formula-excel-example\">Profitability Index excel template<\/a>.\n","protected":false},"excerpt":{"rendered":"<p>Profitability index (profit index) is very similar to NPV. It also calculates with the present values of future cash flows and discount rate, therefore it takes in account the time&#8230;<\/p>\n","protected":false},"author":1,"featured_media":69079,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6],"tags":[68],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v15.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Profitability Index (PI): Real Estate Analysis | Zilculator: Real Estate Investment Analysis blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zilculator.com\/blog\/profitability-index-pi-real-estate-analysis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Profitability Index (PI): Real Estate Analysis | Zilculator: Real Estate Investment Analysis blog\" \/>\n<meta property=\"og:description\" content=\"Profitability index (profit index) is very similar to NPV. 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