12. A firm has a capital budget of $12.5 million and net income of $4.8 million. The firm plans to maintain its target debt ratio of 45%. If the firm uses all of its income to finance capital needs, the external equity needed to finance this budget is closest to: A) $825,000 B) $2,075,000 C) $5,625,000 D) $6,875,000 E) $7,700,000