Decimal places (when relevant): please keep 2 in all calculations. For interest rates, keep 2 digits in the form of 3.xx% unless otherwise specified.

PLEASE SHOW ALL WORK! WITHOUT FINANCIAL CALCULATOR and NO EXCEL

If you are not going to answer all the parts to the question please leave it for someone else. THANKS

6. Lucky Corp. is looking to purchase an equipment for $7,200. The asset has a 2-year life, will produce a cash flow of $1,200 in the first year and $8,400 in the second year. The acceptable time to recover the investment is 1 year and 10 months. The interest rate is 15%.

1. Calculate Profitability Index. Should the project be accepted?
2. Calculate the project's discounted payback. Should the project be accepted?