Estimating the cash flow generated by 51 Invested in a project The profitability index (PI) is a capital budgeting tool that is defined as the present value of a projoctis cash inflows divided by the absolute value of its initial cash outflow. Consider this case: Free Spirit Industries is considering investing $2,750,000 in a project that is expected to generate the following net cash flows: Frei Spirit Industries uses a wacc of 20 when evaluating proposed capital budgeting orojects, Based on these cash hows, determice inia project ? Pi (rounded to four decinal places) 0,5102 0,4406 6.4179 0.4638 0.5102 0.4406 0.4174 0.4638 Free Spirit tndustries's decision to accept or reject this project is independent of its eecisions on cther projectsi Gased on the project's P1, the firm should the project. By comparison, the Nov of this praject is - On the bases of this evaluation enterion, Free Spirt tndtutrinn should the groject because the project increase the firm's value. A project with a negative Noy vill have a Pf that is when it has a Pf of 1.0, it will have an NPV