The local franchise of Jiffy Lube is thinking of buying a new lift for $40,000 that would make it easier to access the oil filter in customers' cars and save labor. The savings would increase over the project's 3-year life, in line with the projected growth of the business. The machine is to be linearly depreciated to zero and will have no resale value after 3 years.

The appropriate cost of capital for this project is 16%. The company has a tax rate of 21%.

	Year 1	Year 2	Year 3
Cost savings	90,000	99,000	118,800
Depreciation	13,333	13,333	13,333
EBIT	76,667	85,667	105,467
Taxes (21%)
Net income
Depreciation
FCF

What is the free cash flow in year 1, year 2, year 3?

What is the NPV of this project?