3. Consider a capital expenfiture project to purchase and install new equipment with an initial casj outlay if $28,000. The project id expected to generate after tax cash flows esch year of $3,900 for ten years and at the end of the project a one tome after tax flow of $2,600 id expected. The firm has a weighted average cost of capital of 7 % and requires a 3 yr payback on projects of this type. Calculate the profitability index for the project.

a. 1.03

b. nome of the listed choiced id correct

c. 0.02

d. 0.98

e. -0.02