It is very conflicting. It says "the before tax profits to rise by 350,000 per year." If we are to ignore taxes, then the annual cash inflow is 350,000 plus the depreciation tax shield. But without taxes, there's no tax shield. So perhaps the cash flow is just the 350,000 savings plus the change in depreciation? No, depreciation itself isn't a cash flow. So maybe the problem is simplified to consider cash flows as the 350,000 savings, and initial outlay, without taxes. But then the loss on sale of the old machine wouldn't have a tax shield. This is conflicting.