To calculate the cash flows for the project over the 6-year life of the washer, we need to analyze the initial investment, annual savings, depreciation, and tax savings. Here’s a step-by-step breakdown of each component:

1. Initial Investment (Year 0)

• Cost of New Washer: $6,900
• Sale of Old Washer: $2,100
• Net Initial Investment: $\text{Net Initial Investment} = \text{Cost of New Washer} - \text{Sale of Old Washer} = 6,900 - 2,100 = 4,800$

So, the cash flow for Year 0 is -$4,800.

2. Annual Savings

The new washer saves the company $1,900 per year in expenses.

3. Depreciation

Since the new washer is depreciated using straight-line depreciation over 6 years: $\text{Annual Depreciation} = \frac{\text{Cost of New Washer}}{\text{Useful Life}} = \frac{6,900}{6} = 1,150$

4. Tax Savings from Depreciation

The tax savings from depreciation each year is calculated as: $\text{Tax Savings from Depreciation} = \text{Annual Depreciation} \times \text{Tax Rate} = 1,150 \times 0.21 = 241.5$

5. Total Annual Cash Flow (Years 1 to 6)

Each year, the total cash flow is calculated as follows: $\text{Annual Cash Flow} = \text{Annual Savings} + \text{Tax Savings from Depreciation}$ Substituting the values: $\text{Annual Cash Flow} = 1,900 + 241.5 = 2,141.5$

Summary of Cash Flows

The cash flows over the 6-year period are as follows:

• Year 0: -$4,800 (initial investment)
• Year 1 to Year 6: $2,141.5 each year

Final Cash Flow Table

Year	Cash Flow ($)
0	-4,800
1	2,141.5
2	2,141.5
3	2,141.5
4	2,141.5
5	2,141.5
6	2,141.5

Let me know if you’d like more details on the calculations or have further questions!

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Here are some related questions you might find useful to explore:

1. How would the cash flows change if the tax rate were different?
2. What impact would a residual (salvage) value have on the final year's cash flow?
3. How would a different depreciation method, like double-declining balance, affect the annual cash flows?
4. What would be the net present value (NPV) of the project with a 10% discount rate instead of 18%?
5. How would extending the life of the washer beyond 6 years affect the financial assessment?

Tip: Calculating the tax impact of depreciation helps capture the full tax shield benefit for capital investments.