Options for the fill in the blanks in order:

reject/accept

$910,310 / -$910,310 / -$864,795

investot invest

will/will not

9. Profitability index Aa Aa E Estimating the cash flow generated by $1 invested in a project The profitability index (PI) is a capital budgeting tool that is defined as the present value of a project's cash inflows divided by the absolute value of its initial cash outflow. Consider this case: Fuzzy Badger Transport Company is considering investing $2,225,000 in a project that is expected to generate the following net cash flows: Fuzzy Badger Transport Company uses a WACC of 8% when evaluating proposed capital budgeting projects. Based on these cash flows, determine this project's PI (rounded to four decimal places): Year Cash Flow Year 1 $275,000 Year 2 $500,000 Year 3 $425,000 Year 4 $400,000 O O 0.5614 0.5909 0.6500 0.6204 O Fuzzy Badger Transport Company's decision to accept or reject this project is independent of its decisions on other projects. Based on the project's PI, the firm should the project. By comparison, the NPV of this project is Transport Company should . On the basis of this evaluation criterion, Fuzzy Badger in the project because the project increase the firm's value