W 10: Assignment-The Basics of Capital Budgeting Evaluating Cash Flows Estimating the cash flow generated by $1 invested in a project The profitability index (Py) is a capital budorting tool that is defined as the present value of a project's cich inflows divided by the absolute value of its Initial cash outslow. Consider this cases Plive Moose Hicene Bulders is considering investing $2,500,000 in a project that is expected to penerate the following net cash flows: projecti 1 (rounded to four decimal olaces): 0,5100 Blue Moose Home ulders uses a wACC of 10% when evaluating proposed cashal budgeting orojects. Based an these cash flows, determine this preject's PI (rounded to four decimal places): 0.4571 0.5709 0.4931 0.5190 Blue Moose Home Bullders's decision to accept of reject thit project is independent of its decislons on other projects, Based an the projects pi, the firm thould the profect. By combarison, the Nay of this projekt is On the basis of this evituation criterion. Blue Moose Home Builders shouid in the peofect becaute the project increase the firm's value. A project with a negative NPV wa have a pt that is : when it has a Pl of 1.0, it will have an NPV