Brown Bag, Inc

Brown Bag, Inc. is a company that manufactures colorful lunch bags made from compostable paper. Management would like to increase production and knows the only way to do this would be to add an additional industrial cutting machine. Brown Bag has a required rate of return of 8.2%, a Weighted Average Cost of Capital (WACC) of 6.3%, and a tax rate of 25%. The cutting machine will cost $22,407 and has a useful life of 15 years. How much Operating Income (before tax) must be generated to achieve an Economic Value Added (EVA) of $551.43? (Do not round intermediate calculations.)

A) $1,882.19
B) $1,963.07
C) $2,617.43
D) $3,185.07