DPaul IncForecasts a Capital Budget of $725,000

Multiple Choice

D.Paul Inc.forecasts a capital budget of $725,000.The CFO wants to maintain a target capital structure of 45% debt and 55% equity,and she also wants to pay a dividend of $500,000.If the company follows the residual dividend model,how much income must it earn,and what will its dividend payout ratio be?

A) $ 898,750; 55.63%
B) $ 943,688; 58.41%
C) $ 990,872; 61.34%
D) $1,040,415; 64.40%
E) $1,092,436; 67.62%