Fauver Industries Plans to Have a Capital Budget of $650,000

Multiple Choice

Fauver Industries plans to have a capital budget of $650,000.It wants to maintain a target capital structure of 40% debt and 60% equity,and it also wants to pay a dividend of $225,000.If the company follows the residual dividend model,how much net income must it earn to meet its investment requirements,pay the dividend,and keep the capital structure in balance?

A) $584,250
B) $615,000
C) $645,750
D) $678,038
E) $711,939