Matt Kifer, president of Kifer Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year net income was $600,000, and the corporation paid $120,000 in dividends. This year, due to some unusual circumstances, the corporation had income of $1,500,000. Matt expects next year’s net income to be about $700,000. What was Kifer Corporation’s payout ratio last year? If it is to maintain the same payout ratio, what amount of dividends would it pay this year? Is this necessarily a good idea—that is, what are the pros and cons of maintaining a constant payout ratio in this scenario?