Depreciation in project appraisa

Hi,
I am having some problem regarding the appraisal of the a project.The company has after tax waac of 8% and pays tax @30% in arreas. I havebto find the net present value of this project. My quarries about it are:
– what i do about the depreciation. Should it be deducted from the total costs. I mean if it was already included? What assumption to make.
– is tax benefit available for this depreciation. Should tax effect be added to cash flows.
– how should the value of existing machine be treated.its depreciation.

I would like some detailed explabation.. thank you.

The information about Project B.
The initial investment of this project is $1.5m in addition to the $130,000 in working capital, which would be recovered fully in the final year of operation. An existing machine with a book value of $190,000 is to be used in this project. The expected life of this project is five years and there is no scrap value at the end. The machines used in this project are to be depreciated using straight line method.
The sales revenue to be generated by this project at the end of the first year would be $1m and it is expected to be increased by $300,000 every year. The total costs related to this project are expected to be increased by $240,000 every year from $630,000 in the first year.