1. Eveningstar Worldwide forecasts a capital budget of $650,000, and its initial capital structure of 40% debt and 60% equity. It also wants to pay $5 dividend/share of 38,150 total shares outstanding. If the company follows the residual dividend policy, and its capital structure is changing to 30% equity and 70% debt how much net income must it earn to meet its capital requirements, pay the dividend, and change the capital structure?

1. $645,750
2. $415,000
3. $385,750
4. $278,250
5. $111,250

F. None of the above (plz state the answer)

Please show work