Initial investment: $100,000

Annual net cash flows:

• Year 1: $20,000
• Year 2: $25,000
• Year 3: $30,000
• Year 4: $35,000
• Year 5: $40,000

Calculate:

1. The cumulative net cash flows at the end of each year.
2. The payback period, rounded to one decimal place.
3. Whether the project recovers its initial investment within five years.

If so, in which year and month the payback occurs.