Adam Smith is considering automating his pen factory with the purchase of a $475,000 machine. Shipping and installation would cost $5,000. Smith has calculated that automation would result in savings of $45,000 a year due to reduced scrap and $65,000 a year due to reduced labor costs. The machine has a useful life of 4 years and falls in the 3-year property class for depreciation purposes. The estimated salvage value of the machine at the end of four years is $120,000. The old machine is fully depreciated, but has a salvage value today of $100,000. The firm's marginal tax rate is 34 percent.

1. What is the initial cash outflow at time period 0?
2. What would be the relevant incremental cash inflows over the machine's useful life