Your Company needs to purchase new machine to meet the demand for its product. The cost of the equipment is $310,000. It is estimated that the firm will increase operating cash flow (OCF) by $38,000 annually for the next seven years. The firm is financed with 40% debt and 60% equity, both based on market values. The firm's cost of equity is 8% and its pre-tax cost of debt is 6%. The flotation costs of debt and equity are 4% and 6%, respectively. Assume the firm's tax rate is 30% .