David Rose Inc. forecasts a capital budget of $500,000 next year with forecasted net income of $225,000. The company wants to maintain a target capital structure of 30% debt and 70% equity. If the company follows the residual dividend policy, how much in dividends, if any, will it pay?

Select the correct answer.

a. $288

b. $0

c. $72

d. $216

e. $144