A firm projects next year's after-tax earnings at $300,000 and proposes capital budgeting expenditures of $300,000 for new projects. If the target capital structure is 30% debt and 70% equity, what should the dividend payout ratio be if the firm adheres strictly to the residual dividend theory?

Select one:

a.

20.0%

b.

30.0%

c.

0.0%

d.

70.0%