A company has an income of $$55$ million, a target debt ratio of $40\%,$ and a capital budget of $$40$ million. The company has encountered new investment opportunities and increased its capital budget to $$52$ million.

How will this change in the capital budget affect the company$$s payout ratio?

Reduce the dividend yield by approximately $18\%$

Increase the payout ratio by approximately $16\%$

Reduce the payout ratio by approximately $12\%$

Increase the dividend yield by approximately $14\%$