The operating cash flows equal the after-tax benefit plus the tax savings from depreciation.
CF2 = Benefit2 × (1 − tax rate) + depreciation2 × (tax rate)
($25,000 × 0.65) + ($57,500 × 0.32 × 0.35) = $22,690
Note that the shipping and installation costs are part of the depreciable basis for the machine
