Initial investment: $130,000

Annual net cash flows:

• Year 1: $25,000
• Year 2: $30,000
• Year 3: $35,000
• Year 4: $40,000
• Year 5: $45,000

Calculate:

1. The cumulative net cash flows at the end of each year.
2. The payback period.
3. Whether the project recovers its initial investment within five years.
4. Graph the cumulative net cash flows over the five-year period.
5. Indicate the exact year and month when the payback occurs.