The present value index is computed using which of the following formulas?

A) Amount to Be Invested/Average Rate of Return
B) Total Present Value of Net Cash Flow/Amount to Be Invested
C) Total Present Value of Net Cash Flow/Average Rate of Return
D) Amount to Be Invested/Total Present Value of Net Cash Flow

Present Value Index

An investment appraisal tool that compares the present value of net cash inflows generated by a project to the present value of cash outflows, indicating the profitability.

Net Cash Flow

The difference between a company’s cash inflows and outflows in a given period, indicating the company's ability to generate cash.

Amount to Be Invested

The total sum of money dedicated to a particular investment or project.