The initial outlay of a project is $10 million. The 12-year project is expected to generate annual net cash flows each year of $1 million and have an expected terminal value at the end of the project of $5 million. The cost of capital is 6 percent, and the firm's marginal tax rate is 40 percent. Find the profitability index of this project.

• 1.09
• 1.70
• 0.09
• 1.34
• 0.84