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 $2,500,000 in a project that is expected to generate the following net cash flows: Year Cash Flow Year 1 $325,000 Year 2 $400,000 Year 3 $450,000 Year 4 $450,000 Fuzzy Badger Transport Company uses a WACC of 10% when evaluating proposed capital budgeting projects. Based on these cash flows, determine this project's PI (rounded to four decimal places): O 0.4832 O 0.5849 O 0.5086 O 0.5595 -$1,228,519 Fuzzy Badger Transport Company's decisi -$1,474,223 reject this project is independent of its decisions on other projects. Based on the project's PI, the firm should reject the project. -$982,815 By comparison, the NPV of this project is not invest in the project because the project will not On the basis of this evaluation criterion, Fuzzy Badger Transport Company should increase the firm's value. less than $0 equal to $0 hould By comparison, the NPV of this project is not invest in the project because the project will not On the basis of this evaluation criterion, Fuzzy Badger Tra increase the firm's value. greater than $0 A project with a negative NPV will have a PI that is less than 1.0 ; when it has a PI of 1.0, it will have an NPV