Kindly help with this:

The Gilbert Instrument Corporation is considering replacing the wood steamer it currently uses to shape guitar sides. The steamer has 6 years of remaining life. If kept, the steamer will have depreciation expenses of $650 for 5 years and $325 for the sixth year. Its current book value is $3,575, and it can be sold on an Internet auction site for $4,150 at this time. If the old steamer is not replaced, it can be sold for $800 at the end of its useful life.

Gilbert is considering purchasing the Side Steamer 3000, a higher-end steamer, which costs $11,000, and has an estimated useful life of 6 years with an estimated salvage value of $1,100. This steamer falls into the MACRS 5-years class, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The new steamer is faster and would allow for an output expansion, so sales would rise by $2,000 per year; even so, the new machine's much greater efficiency would reduce operating expenses by $1,400 per year. To support the greater sales, the new machine would require that inventories increase by $2,900, but accounts payable would simultaneously increase by $700. Gilbert's marginal federal-plus-state tax rate is 40%, and its WACC is 13%.

Should it replace the old steamer?

My solution:

Old machine

Step#1 - Calculate PV of tax savings on depreciation 

Step#2 - PV of salvage value

Answer - NPV $1,207.47

New machine

Step # 1 - Cost after sale of old machine and tax on gain of sale of old machine $7,080

Step # 2 - Working capital investment $2,200

Step # 3 - Incremental cash flow each year $2,000+$1,400-$Dep each year under macrs 

Step # 4 - less Tax @40% and add back Dep

Step # 5 - working capital recovery in year 6 and sale of new machine after tax

NPV = $3,423.36