Free Spirit Industries Inc. uses a WACC of 9% when evaluating proposed capital budgeting projects. Based on these cash flows, determine this projects PI (rounded to four decimal places):

0.7115

0.5878

0.6187

0.6496

Free Spirit Industries Inc.s decision to accept or reject this project is independent of its decisions on other projects. Based on the projects PI, the firm shouldreject the project.

By comparison, the NPV of this project is . On the basis of this evaluation criterion, Free Spirit Industries Inc. should in the project because the project increase the firms value.

A project with a negative NPV will have a PI that isless than 1.0 ; when it has a PI of 1.0, it will have an NPVequal to $0 .