The total cash flow for the terminal year is equal to the operating cash flow plus the non-operating (or terminating) cash flow.
The operating cash flow equals:

CF3 = (revenue − cost)3 × (1 − tax rate) + net depreciation3 × (tax rate)
((40,000 – 5,000) × 0.65) + [((0.15 × 100,000) − 0) × 0.35)] = $28,000

The non-operating cash flow equals the market or salvage value plus/minus tax consequences of selling it. The new machine will be sold for $20,000. The book value after 3 years of depreciation is $100,000 × (1.00 - 0.33 - 0.45 - 0.15) = $7,000. So, the gain equals $20,000 – $7,000 = $13,000.

The firm will pay taxes on the gain of:

13,000 × 0.35 = $4,550

Total terminal year cash flow = $28,000 + $20,000 – $4,550 = $43,450

Note: Once we have the project’s estimated cash flows, the next step in the process would be to calculate the net present value and internal rate of return for the project