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How do you come up with a cash flows statemement?

This is my last problem in this set and I am confused about what to use NPV / IRR?

How do you come up with a cash flows statemement - like the one attached for this particular problem?

I am very confused and hope that you can help.

** See ATTACHED file(s) for complete details **


Solution Summary

Here is just a sample of what you'll find in this solution:

"It is very important that the Annual Savings = $28,000 are treated as cut in cost, rather than increase in revenue. Otherwise, we have to adjust for the increase in cost and expenses along with the sales, which might even worsen the projects' status."