Steves Ice Cream Parlor in St. Louis is famous for its gourmet ice cream. However, some customers have asked for a healthy, low-cal, soft yogurt. The machine that makes this confection is manufactured in Italy and costs $5,000 plus $1,750 installation. Steve estimates that the machine will generate a net cash flow of $2,000 a year. Steve also estimates the machines life to be 10 years and that it will have a $400 salvage value. His cost of capital is 15 percent. Steve thinks the machine is overpriced. Is he right? Support your answer by NPV, IRR, and PI calculations. What is a payback period?