Grandin Inc. is evaluating its dividend policy. It has a capital budget of $625,000, and it wants to maintain a target capital structure of 60% debt and 40% equity. The company forecasts a net income of $675,000. If it follows the residual dividend policy, what is its forecasted dividend payout ratio? Select the correct answer.

a. 65.87% b. 63.93% c. 62.96% d. 66.84% e. 64.90%