Investment Scenario:

• Initial investment: $120,000
• Cash inflows:
  • Year 1: $20,000
  • Year 2: $25,000
  • Year 3: $35,000
  • Year 4: $45,000
  • Year 5: $55,000

Tasks:

1. Calculate the payback period.
2. Determine the cumulative cash flow at the end of year 2.
3. Identify the surplus cash flow after payback.