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: Free Spirit Industries Inc. is considering investing $2,500,000 in a project that is expected to generate the following net cash flows: Year Cash Flow Year 1 $350,000 Year 2 $400,000 Year 3 $500,000 Year 4 $400,000 Free Spirit Industries Inc. 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): 0.6247 0 0.5432 O 0.5704 O 0.6518 Free Spirit Industries Inc.'s decision to accept or reject this project is independent of s decisions on other projects. Based on the project's PI, the firm should the project