The present value of the future cash flows divided by the initial investment. Also called the benefit-cost ratio.
This index is the ratio of the present value of after-tax inflows to the outflows. An index greater than one indicates that a project has a yield greater than the discount rate (Winston, 1995).
Also known as the benefit/cost ratio of a capital-expenditure project, it is defined as the ratio of discounted after-tax cash inflows divided by discounted after-tax cash outflows. Projects for which this ratio exceeds one show a positive return and are deemed acceptable.