Consider a capital expenditure project to purchase and install new equipment with an initial cash outlay of $17,000. The project is expected to generate net after-tax cash flows each year of $2,900 for nine years, and at the end of the project, a one-time after-tax cash flow of $1600 is expected. The firm has a weighted average cost of capital of 11 percent and requires a 3-year payback on projects of this type. Calculate the profitability index for the project.

a. 0.98

b. -0.02

c. -0.05

d. 1.54

e. none of the above