Cash flows estimation and capital budgeting: You are the head of finance department in XYZ Company. You are considering adding a new machine to your production facility. The new machines base price is $10,000.00, and it would cost another $2,250.00 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after three years for $2,450.00. The machine would require an increase in net working capital (inventory) of $880.00. The new machine would not change revenues, but it is expected to save the firm $30,145.00 per year in before-tax operating costs, mainly labor. XYZ's marginal tax rate is 35.00%.

If the project's cost of capital is 16.00%, what is the NPV of the project?

Check for the question with "Cash flows estimation and capital budgeting:" in this test and answer the following questions (show your work in details here):

a. What is the initial cash outlay? (4 pts.)

b. What are the free cash flow for year 1? (5 pts)

c. What is the additional Year-3 cash flow (i.e, the after-tax salvage and the return of working capital also called terminal value)? (5 pt)

Please SHOW ALL WORK, so I can undersand. Thank you!