XYZ is evaluating a project that would require the purchase of a piece of equipment for $590,000 today. During year 1, the project is expected to have relevant revenue of $788,000, relevant costs of $207,000, and relevant depreciation of $125,000. XYZ would need to borrow $590,000 today to pay for the equipment and would need to make an interest payment of $26,000 to the bank in 1 year. Relevant net income for the project in year 1 is expected to be $337,000. What is the tax rate expected to be in year 1?

A.A rate equal to or greater than 23.25% but less than 26.89%

B. A rate equal to or greater than 31.49% but less than 38.72%

C. A rate equal to or greater than 26.89% but less than 31.49%

D. A rate less than 23.25% or a rate greater than 45.54%

E. A rate equal to or greater than 38.72% but less than 45.54%