Thank you so much.
Data:
Cost of new equipment $200,000
Expected life of equipment in years 5
Disposal value in 5 years $40,000
Life production - number of cans 5,500,000
Annual production or purchase needs 1,100,000
Initial training costs 0
Number of workers needed 3
Annual hours to be worked per employee 2,000
Earnings per hour for employees $12.00
Annual health benefits per employee $2,500
Other annual benefits per employee-% of wages 18%
Cost of raw materials per can $0.25
Other variable production costs per can $0.05
Costs to purchase cans - per can $0.45
Required rate of return 12%
Tax rate 35%

Make Purchase
Cost to produce
Annual cost of direct material:
Need of 1,100,000 cans per year $275,000
Annual cost of direct labor for new employees:
Wages 72,000
Health benefits 7,500
Other benefits 12,960
Total wages and benefits 92,460

Other variable production costs 55,000

Total annual production costs $422,460

Annual cost to purchase cans $495,000

For the Cash flow over the life of the project section.

Annual cash savings 72,540 (495,000-422,460) Before Tax Amount
Tax Effect = .55 (=1-.45)
After Tax Amount = 39,897 (72,540*.55)

Tax savings due to depreciation
32,000 (200,000-40,000)* 1,100,000/5,500,000
Tax Effect =.45
After Tax Amount 14,400 (32,000*.45)

Total annual cash flow is now 54,297 ( I am off by 4054).
Did I miss something? Thank you.

You are correct until your annual cash savings part. You used the wrong tax rate. The tax rate is 0.35 so your tax effect is 0.65 (1-.35).

Your tax saving due to depreciation part, your tax effect is 0.35

Once you change your tax effects parts and recalculate your totals you should be at $58,351 total annual cash flow.