A firm is considering investing in a program which costs $10 million. The program is expected to generate annual net cash savings after tax of $1 million for the next 14 years with a terminal value at the end of year 14 of $3 million. The firms cost of capital is 5 percent and marginal tax rate is 40 percent. What is the profitability index of this program?

• 0.86

• 1.70

• 1.18

• 0.14

• 1.14