The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 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:

A B C D

1 Year 1 2 3

2 Cost savings 90,000 99,000 118,800

The machine is to be linearly depreciated to zero and will have no resale value after 3 years. The company uses a discount rate of 11% and has a tax rate of 21%.

Part 1

What is the free cash flow in year 3?

Part 2

What is the NPV?