Hi, PI = PV of future cashflows / CFo = 1 + NPV/CFo Can anyone explain how this relationship holds. Where does the 1 + come from? thanks

NPV = - initial outlay(same as CFo) + PV of future cash inflows. => PV of future cash inflows = NPV + initial outlay(same as CFo) now plug this equation in PI equation and you will get the answer

thanks. that makes sense