Q6 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? [4 points]
2. Calculate the project's discounted payback. Should the project be accepted? [2 points]