Which capital budgeting metric reflects the total ratio of the present value of future cash inflows to the initial cash outlay?

Explanation

• The Profitability Index (PI), or Benefit-Cost Ratio, is calculated as: $text{PI} = frac{text{Present Value of Future Cash Inflows}}{text{Initial Cash Outlay}}$.
• A project is financially acceptable under the Profitability Index rule if its PI is greater than 1.0.
• PI is especially useful when ranking projects under conditions of capital rationing.