It is used to select projects under conditions of limited capital

economics

Description

Discounted Profit to Investment Ratio is a dimensionless ratio obtained by dividing net present value (NPV) by the investment 

• It is used to select projects under conditions of limited capital 

• The decision rule is to maximize the ratio 

• DPIR is the amount of Net Present Value Profit generated per discounted investment dollar 

• Remember though, - no need to discount if all investment happens at time 0!!

Instruction Files

Related Questions in economics category